AFSCME Legislative Report
April 15, 2005
Congress — Week ending April 15
GOP letter on Medicaid sent to House Budget Committee Chair. Estate Tax
repealed in House. TANF consideration put on hold.
In this issue:
Budget Action Slowed
Congress has yet to meet to resolve major differences in the level of
Medicaid cuts, the size of new tax cuts and other spending cuts harmful to the
states that would be called for in the budget resolution for FY 2006. In fact,
the House has failed to even name its negotiators. However, action could come at
any time.
AFSCME members should continue to call their Members of Congress at
202-224-3121 and tell them to oppose any congressional budget resolution that
cuts vital public services to the state, cuts Medicaid, increases the deficit
and gives more tax cuts to the rich.
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Medicaid — Republican Letter Sent to GOP Leadership
A letter signed by 44 House Republicans and organized by Rep. Heather Wilson
(R-NM) was sent to Budget Committee chair Jim Nussle (R-IA) asking that the $20
billion in Medicaid cuts contained in the House Budget Resolution be dropped in
conference. The House Leadership and the White House applied considerable
pressure to the members of their caucus not to sign the letter. This, of course,
raises the visibility of this issue in the conference, and helps bolster the
Senate position of "no cuts."
Our field staff that are working on our budget campaign as well as affiliate
staff were instrumental in securing the commitment of several of these
Republicans.
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House Passes New Tax Cut for the Rich
The House of Representatives, continuing its campaign for tax
irresponsibility, once again passed costly new legislation (H.R. 8) to
permanently repeal the estate tax. The legislation passed by a vote of 272 to
162. Forty-two Democrats supported the bill and just one Republican, Rep. Jim
Leach (IA) voted against it. The repeal of the estate tax provides huge benefits
to the very wealthiest in our society at the very same time the House approved a
budget resolution, which would slash Medicaid, food stamps and other programs
relied upon by the most economically vulnerable of our citizens. In reality,
very few families, small businesses or family farms are affected by the estate
tax, and if it becomes law it will add nearly $1 trillion over the next 20 years
to the growing federal budget deficit. Under current law, only estates over $1.5
million for an individual or $3 million for a couple are taxed and the exemption
rises to $3.5 million for individuals and $7 million for a couple in 2009. The
legislation now moves to the Senate for consideration.
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Legislative Action on Social Security Begins
President Bush is completing the last leg of his 60-Day, 60-Event Social
Security Tour designed to increase public support for his plan to privatize
Social Security. However, the more Bush tries to sell his scheme, the more the
public seems to oppose it. Despite Bush's intensive campaign to promote the
idea, the percentage of Americans who say they favor private accounts has
tumbled to 46 percent in Pew's latest nationwide survey, down from 54 percent in
December and 58 percent in September. Support has declined as the public has
become increasingly aware of the President's plan.
A month ago Sen. Charles Grassley (R-IA), Chair of the Senate Finance
Committee, expressed doubts that there would be legislative action this year on
Bush's plan because of its lack of public support. However, under heavy pressure
from the White House, Sen. Grassley quickly reversed himself and this week
announced that the Finance Committee would hold the first of two hearings on
Bush's Privatization Plan in Washington on April 26th. Sen. Grassley also said
that he expected to have a Social Security bill, which included private
accounts, on the Senate floor in July. Opponents of the Bush privatization
scheme, led by AFSCME and Americans United to Protect Social Security (AUPSS),
are organizing a rally on the Senate lawn for April 26th to send a very loud and
clear message of opposition. Every member of the Democratic caucuses in the
House and Senate will be asked to join with thousands of privatization
opponents. AFSCME expects to have over 600 members in Washington, D.C. to
protest Bush's plan to privatize Social Security. For those who cannot travel to
Washington on April 26th, rallies will be held in over three dozen states and
cities around the country to send the same message.
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Senate WIA Discussions Complicated By Push for Block
Grants
Although Senate legislation to reauthorize the Workforce Investment Act (WIA)
was introduced without either the House block grant of the WIA adult and
dislocated worker programs with the Wagner-Peyser Act or the Administration's
WIA Plus initiative, the Administration and conservative Republicans on the
Health, Education, Labor and Pensions Committee (HELP) are pressing hard for the
addition of both to the Senate bill.
At the only Senate hearing on the subject this week, Administration officials
made a case for state and local flexibility, consolidation of programs and a
worker-centered program. The worker-centered aspect of their proposal involves
giving individuals instead of public, non-profit, or private agencies federal
funds for training and job search assistance. This concept is reflected in
proposals for individual training accounts for workers to purchase services for
themselves and Personal Reemployment Accounts (PRAs).
WIA Plus and the House block grant reflect the goals of consolidation and
flexibility. WIA Plus would allow governors to merge five additional programs
into the House block grant: Trade Adjustment Assistance (TAA), Vocational
Rehabilitation, Foods Stamps Employment and Training Programs, Adult Education,
and Veterans Employment and Training Programs. Under WIA Plus, governors could
ignore the requirements of each statute authorizing these programs, treat
individuals in different parts of a state differently, and consolidate reporting
so that no information would be available on the nature and extent of services
to special groups.
A decision to include either of the block grant proposals is likely to
destroy the bipartisanship that characterized Senate work on the WIA legislation
in the last Congress.
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TANF Legislation Slows Down
Work in both the House and Senate on Temporary Assistance for Needy Families
(TANF) legislation has been put on hold. In the Senate, disagreement among
Republicans over the cost of the bill and a search for a way to pay for the $6
billion child care increase have held up floor consideration of the bill. In
light of the Senate dispute, the House Ways and Means Committee leaders have
delayed further consideration of TANF until the Senate is able to move forward.
Return to Index
House Committee to Hold Hearing on Campaign Finance
Reform
The House Committee on House Administration will hold a hearing next
Wednesday on Campaign Finance Reform. Larry Gold from the AFL-CIO will be the
labor witness.
Return to Index
Cleared Bankruptcy Overhaul Puts Onus on Legal System
to Make Adjustment
The House cleared legislation (S. 256) to overhaul the federal bankruptcy
code, providing business groups with a long-sought victory while raising
concerns among bankruptcy judges who will have to implement the new rules. The
House voted 302-126 to clear the bill, with 73 Democrats voting in favor of the
legislation. No Republicans opposed the measure, which has been a top priority
for the financial services industry, especially credit card companies, since
1997.
The legislation's backers, pointing to the great increase in bankruptcy
filings in the past decade, argued the overhaul was needed to stop abuses of the
system. Opponents characterized the measure as a giveaway to financial services
interests that would make it more difficult for those legitimately in financial
trouble to discharge their debts. The House action sends the bill to President
Bush, who has said he would sign it.
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Intergovernmental Relations — Update
The following is a periodic report on the activities of state and local
government interest groups.
Nearly Half the States Experiencing Long-Term Structural Budget Gaps
- While many state revenues are surpassing predictions this year, almost
half the states are experiencing year-after-year imbalance between costs and
revenues, thus creating longer-term structural budget gaps that must be
addressed, according to a just-released
report by
the National Conference of State Legislatures (NCSL). Some states enacted
tax legislation this year to strengthen their tax bases to correct the
imbalance. After almost all states eliminated deficits in their 2005
budgets, more than half the states faced FY 2006 budget gaps, which reflect
expanding Medicaid costs and the lingering effects of states' fiscal crises
a few years ago. NCSL has identified new costs in health care, K-12
education and other areas, pent-up demand for spending on delayed projects,
and the federal government's failure to fully fund mandated programs as the
primary reasons for states' continuing budget woes.
Prescription Drug Prices Continue to Skyrocket
- Wholesale prices for widely used prescription drugs rose an average of
7.1 percent in 2004, more than twice the inflation rate, according to a new
study commissioned by AARP. This represents the biggest increase in the five
years that AARP has sponsored the study. The study noted that wholesale
price increases are routinely passed on to consumers in retail prices. These
price increases are particularly ominous given that the new Medicare
prescription drug benefit will go into effect next year and the new law
prohibits the federal government from negotiating lower drug prices. (AFSCME
strongly opposed the Medicare law, in part because of this prohibition.)
Americans Underpay Taxes $350 billion Each Year
- This week, the Senate Finance Committee convened experts to discuss
proposals to reduce America's yearly tax gap of $350 billion. The tax gap,
the difference between what taxpayers should pay and actually pay, is
enormous and almost equals the entire annual federal budget for all domestic
services. For example, federal funding for the No Child Left Behind
education programs is only about $25 billion or 7 percent of America's
uncollected tax payments. The U.S. Comptroller General said the tax gap
problem is a bigger threat to America's budget than Social Security. The
experts agreed that recovering much of this $350 billion would require
tougher enforcement efforts, increased staffing, tax simplification,
detailed analysis of non-compliance's causes, and changes to existing tax
forms and IRS procedures. Many congressional Democrats and some Republicans
are fighting to increase the Internal Revenue Service's budget and staffing
levels to reduce non-compliance and enhance federal revenues.
Return to Index
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