NAICU Washington Update

Congress Heads Out of Town, Leaving Loose Ends

August 06, 2010

Before taking its traditional late-summer break from Washington, Congress took steps toward writing the FY 2011 appropriations bills, and extending higher ed tax benefits.  Still, members of the House and Senate left plenty of loose ends to be wrapped up later -- for the most part, after the November elections.


Both the House and Senate Appropriations Committees worked on their versions of the FY 2011 Labor-HHS-Education spending bills in July. 

The House provided $176 billion for its three agencies of jurisdiction.  For education, the bill funded a $5,550 Pell Grant maximum (along with the $5.7 billion needed to cover the Pell shortfall); provided level funding for SEOG, work study, TRIO, GEAR UP and the graduate programs; but eliminated funding for Perkins Loans and LEAP state grants.

With an allocation about $8 billion less than the House, the Senate committee maintained a $5,550 Pell Grant maximum, but didn't cover the shortfall.  Their bill restored funding for LEAP state grants; provided level funding for SEOG, work study, GEAR UP and graduate programs; and increased TRIO by $15 million.

Neither chamber expects to bring these bills to the floor until after the elections.  During the Senate subcommittee mark up, Chairman Tom Harkin (D-Iowa) commented that "this bill won't see the light of day until December."

Meanwhile, appropriators and Democratic leaders in both chambers spent weeks on an effort to add $5 billion for the Pell Grant shortfall and $10 billion for education jobs to the FY 2010 war supplemental bill.  Funding for these programs was added by the House in June, but multiple attempts to do the same in the Senate were unsuccessful. In the end, Congress sent President Obama a "clean" bill funding only the war and disaster aid.

Once the supplemental went to the White House, the Senate looked for other legislative vehicles for the education jobs amendment. It took many "spectacular failures" (as one leadership aide put it), plus a series of convoluted procedural moves.  The end result, however, was that just one day before breaking for the August recess, the Senate approved a free-standing bill providing $10 billion for teacher jobs and $16 billion in federal matching funds for Medicaid (FMAP).

The bill (H.R. 1586) passed with the help of Republican senators Collins and Snowe of Maine, and with heavy pressure from Republican governors in support of the FMAP funds.  Following the Senate action, House Speaker Nancy Pelosi (D-Calif.) called House members back to Washington for a quick session on Tuesday, August 10, in order to vote on H.R. 1586 and send it to the president.

Because this last funding bill did not include any Pell Grant funds, appropriators hope they can cover the shortfall out of regular appropriations later this year.  House Appropriations Chairman David Obey (D-Wis.) allocated enough money to the education subcommittee to do so.  Senate Subcommittee Chairman Harkin acknowledged that the Senate allocation doesn't cover the shortfall, and asked that the House version prevail.  Pressure is growing in the Senate to reduce discretionary spending by another $6 billion -- a step that would put total appropriations at $20 billion below the president's request.  Still, no one supports cutting the Pell Grant maximum as part of these spending reductions.

Congress will return to Washington after Labor Day for a brief session, most likely passing a continuing resolution to keep the government running through the November elections. The final spending bills will be handled in a lame duck session, scheduled to begin November 29.

Tax Extenders

Past weeks also saw a number of failed attempts to pass a one-year, retroactive extension of a variety of expired tax provisions.  Ultimately, Congress adjourned without addressing these important provisions -- among them, the IRA charitable rollover, the tuition deduction, and the research and development (R&D) credit. These items, and many others, expired on December 31, 2009.

Extensions of the expired 2009 provisions were part of the Unemployment Insurance (UI)/Jobs bill, but that bill faced continued controversy regarding the length of the UI insurance extension, and the general revenue offsets.  Eventually, Congress stripped all of the tax extenders from the UI bill, redrafted it to address criticisms, and passed it as a stand-alone bill.  Congress will again attempt to address the expired 2009 tax extenders when the session resumes in September.

Similarly, Congress failed to act on a Small Business bill containing a provision on the taxability of business-issued cell-phones and personal digital assistants (Blackberries).  Specifically, the provision would remove such electronic devices from "listed property." This would allow their cost to be deducted or depreciated like other business property, without onerous recordkeeping requirements.  This provision is popular throughout the business and nonprofit communities.  The Small Business bill is also on the calendar for September.

For more information on appropriations, contact Stephanie Giesecke
For more information on tax policy, contact Karin Johns

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