Committee for a Responsible Federal Budget

‘Line’ Items: A Lonely Road, Paying for Jobs

Highway to Nowhere – Sen. Jim Bunning (R-KY) has blocked a vote on temporarily extending unemployment and COBRA benefits, the Medicare “doc fix” as well as some surface transportation programs funded through the Highway Trust Fund because the $10 billion cost is not offset. He wants unused economic stimulus funds to cover the cost. The Department of Transportation has furloughed 2,000 workers in response.

No Laying Down on the Job – The Senate passed a $15 billion measure last week that provides tax incentives to employers to hire or retain workers. After Senator Judd Gregg (R-NH) raised a PAYGO point of order Senators voted to waive offsetting the spending. But ignoring PAYGO may not be so easy in the House. Blue Dog Democrats in that chamber are opposed to waiving PAYGO rules and are negotiating with leaders to find offsets.

Some Work is Never Done – While the first round of “jobs” legislation is stalled in the House, the Senate is starting Round Two, with a much larger price tag. The American Workers, State and Business Relief Act introduced Monday will extend several tax reductions through 2010, including the research and development tax credit, biofuels incentives, state and local sales tax deductions, and a credit for energy-efficiency improvements to new homes. It also extends expanded unemployment and health care benefits under COBRA through the end of the year. And it delays a 21 percent reduction in Medicare physician payments under the sustainable growth rate (SGR) formula for seven months. The price tag is about $150 billion with only about $43 billion offset. An amendment to the bill offered by Senator John Thune (R-SD) would provide additional business tax breaks that are offset using unspent stimulus funds. And an amendment from Senators Jeff Sessions (R-AL) and Claire McCaskill (D-MO) would institute discretionary spending caps similar to a proposal that was narrowly defeated during the debt limit debate. CRFB supports spending caps.

Healthy Dose of Irony – Because Democrats and Republicans could not reconcile their differences at last week’s health summit, the Senate will likely take up health care reform through the budget reconciliation process, which will allow the measure to pass with a simple majority, as opposed to 60 votes. The President will offer a streamlined proposal tomorrow that may include some Republican ideas.

More Commissioners Appointed – President Obama made the rest of his selections to his fiscal commission last week, tapping CRFB board member Alice Rivlin of the Brookings Institution, Honeywell International CEO David Cote, SEIU president Andy Stern, and former Young and Rubicon CEO Ann Fudge.

Hill Hearing All About the Budget – Hearings continue this week on the FY 2011 budget. The House Budget Committee will have its Member’s Day on Wednesday, when Members of Congress testify on what they want to see in the federal budget. The House and Senate Budget Committees will also convene hearings on the Department of Defense budget.