NAICU Washington Update

Federal Budget Update

November 22, 2013

A Congressional conference committee on the FY 2014 federal budget has made little movement forward on setting the top line spending amount, replacing the sequester, or deciding what role entitlement changes will play in a final agreement, despite conducting two public meetings since its creation in the October 17 deal to reopen the government. 

The committee met to offer opening statements October 30, setting the tone of a bipartisan work group. They accepted a joint letter from House Appropriations Committee Chairman Hal Rogers (R-KY) and Senate Appropriations Committee Chairman Barbara Mikulski (D-MD) asking the conference committee to agree on a total appropriations amount for FY 2014 by the Thanksgiving break so that their committees can finalize spending by the end of the calendar year.

In the second meeting on November 13, Doug Elmendorf, director of the Congressional Budget Office, gave committee members an overview (Presentation to the Budget Conference Committee) of the current budget outlook, including unemployment, spending, deficit and debt trends. The same day, CBO released Options for Reducing the Deficit: 2014 to 2023, which includes a few student aid proposals, such as eliminating subsidized loans, eliminating the mandatory add-on to Pell Grants, and limiting Pell Grants to the neediest students. While these proposals are not new, NAICU will monitor the committee’s deliberations for any movement on student aid funding.

The Student Aid Alliance also sent a letter to the conference committee asking that student aid be protected in their deliberations. The Alliance makes the point that student aid programs have already been dramatically cut since FY 2011 and students can no longer shoulder the burden of deficit reduction.

The conference committee is also responsible for acting on the debt ceiling. A new CBO analysis of the debt outlook: Federal Debt and the Statutory Limit, November 2013, concludes: “If the current suspension is not extended or if a higher debt limit is not specified in law before February 8, 2014, beginning on that date the Treasury will have no room to borrow under standard operating procedures. Therefore, to avoid a breach of the ceiling, the Treasury would begin employing its well-established toolbox of so-called extraordinary measures to allow continued borrowing for a limited time. CBO projects that those measures would probably be exhausted in March. However, the timing and magnitude of tax refunds and receipts in February, March, and April could shift that date of exhaustion into May or June.”

NAICU continues to monitor the conference committee’s work, and will provide additional updates as necessary.

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