NAICU Washington Update

Congress is Back for More Budget Battles

September 08, 2011

Congress came back from its summer break to an agenda full of budget issues, and a partisan environment anticipating the 2012 elections.  NAICU priorities for student aid funding and higher education tax provisions are in the mix in two major arenas this fall - action by the Joint Committee on Deficit Reduction, and the FY 2012 education appropriations.

The "Super Committee"

Media coverage out of Washington is increasingly focused on the Joint Committee on Deficit Reduction, aka the "Super Committee."  This decision-making body was created under the legislation extending the debt limit this summer.  Beyond the $1 trillion already cut through the debt limit bill, the Super Committee must find another $1.2 trillion in deficit reduction over the next 10 years. 

Expectations are that the Super Committee will achieve these savings through entitlement and tax changes, through a reconciliation-type bill.  Reconciliation bills are budget-trimming measures that require House and Senate Committees to cut spending.  They proceed under special rules (such as a prohibition on Senate filibustering) making their passage more likely.  However, recent indications are that some of the Republicans on the Super Committee won't support any tax increases or major entitlement reforms.  Until the committee's deliberations take better shape, it's unclear just where - or even if - they might reach consensus.

Because entitlements and tax provisions might be in play, NAICU is particularly concerned about the fate of the undergraduate in-school interest subsidy for student loans (the only entitlement among the student aid programs), and extension of tax provisions that help students and families save for and pay for college.

The 12-member bipartisan, bicameral committee will look to its leaders and caucuses for input on issues under consideration, so communication with members of the House and Senate will be influential in shaping the committee's decisions.  NAICU has prepared talking points for member presidents' use in conversations with their congressional delegations.

The committee has a tight schedule, with a Thanksgiving deadline for submitting recommendations to Congress, and a Christmas deadline for a final up or down vote.  On the heels of its first official organizing session on September 8, the committee will hold its first public hearing with Douglas Elmendorf, director of the Congressional Budget Office, on September 13.

Both parties are already staking their political ground, with Democrats calling for job stimulus to be included in the Super Committee deal, and Republicans further digging their heels in on tax increases.  President Obama's jobs plan, presented before a joint session of Congress September 8, will define the administration's tone for the fall work period - and will shape the Republicans' response to that plan.

FY 2012 Appropriations

Meanwhile, House appropriators were set to begin marking up their FY 2012 education spending bill on Friday, September 9, but suddenly cancelled the session just 24 hours before they were to meet. The summer debt limit deal set total discretionary spending caps at $24 billion more than the House Budget Resolution, giving the education bill slight increases above their spring allocations.  However, this is still $7 billion below last year's spending level, and we've heard from Hill staff that the education funding mark up is "going to be ugly."

Despite the additional $17 billion provided for the Pell Grant program in the debt limit legislation, an additional $1.3 billion above the debt limit bill funding is needed to maintain a maximum grant of $5,550 for the 2012-13 academic year.  NAICU is concerned that this puts at risk the other student aid programs - SEOG, work study, Perkins, TRIO, GEAR UP, graduate programs - as well as university research and NIH funding.

Once the House writes its FY 2012 bill, the Senate subcommittee is expected to write its bill before the end of the September.  But with the beginning of the new federal fiscal year just three weeks away, Congress will almost certainly need to pass continuing resolutions to avoid a government shutdown.  They then would most likely pass an omnibus appropriations bill before the end of 2011.  (With Christmas Eve falling on Saturday this year, most bets for the last day of the session are for Friday, December 23.)

The Road Ahead

The take-away from all this is that official Washington is in for a brutal Fall 2011.  First among NAICU's tasks will be to ensure that federal assistance in helping families pay for college - through both student aid and tuition tax breaks - remains a bipartisan priority, and not a victim of the increasingly partisan tensions.  The key message is that there is a positive return on the federal investment in student aid and tax benefits, when we help hard-working college students help themselves.  And that's a message that should resonate with both parties.

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