In the wake of the Boston Marathon bombings and emerging effects from sequestration, federal leaders find themselves in a mode of “damage control.” The President introduced his FY 2014 budget and Congress moved swiftly to pass legislation to prevent further delays with the Federal Aviation Administration. Other contentious topics up for discussion include immigration, labor relations, cybersecurity, and gun control. Debate over potential state revenue and e-commerce has also taken center stage as the Marketplace Fairness Act heads to a vote in the Senate.
» Law, Justice, and Ethics
“Gun Bill Stalled in the Senate”In response to the December 2012 mass shooting at Sandy Hook Elementary, Congress sought to pass gun control legislation to expand background checks on purchases, improve the national instant background database, establish a federal gun trafficking law, and increase security in schools. Additional amendments were introduced during the debate, which included proposals to ban military-style assault weapons and high-capacity ammunition clips, and to mandate reciprocity for state-issued concealed carry permits. The Senate began to vote on this package in April 2013—all of those amendments failed. Anticipating an inability to garner enough votes for passage, Senate Majority Leader Harry Reid (D-NV) tabled the underlying bill with hopes of picking up the debate at a later date. House Speaker John Boehner has indicated that the House will not take on gun legislation unless the Senate passes it first.
» Emergency Preparedness/Homeland Security
“Immigration Reform Bill Introduced, but is it Equitable?”A bipartisan group of U.S. Senators known as the “Gang of 8” introduced the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013, a comprehensive bill intended to reform the United States immigration system. Most notably, the bill provides paths to legalization and citizenship for most of the estimated 11 million undocumented residents in the country. The bill also includes investments and improvements in border security and ties permanent residency expansions to meeting certain border security goals. Of particular note, the bill offers major changes in visas distribution, including eliminating the current “diversity visa,” which is a major provider of visas for Black immigrants from Africa and the Caribbean. Congressional Black Caucus Chair Representative Marcia Fudge (D-OH) and several other caucus members have been critical of this elimination, and have announced that they will not support an immigration reform bill that does not include diversity visas.
Meanwhile in the House of Representatives, a bipartisan group of members began crafting their own comprehensive immigration reform bill that would likely resemble the Senate bill. Despite that, House Judiciary Committee Chair Bob Goodlatte (R-VA) has indicated his committee will take up immigration reform in a piecemeal set of smaller bills. Congress is expected to begin fully debating the immigration bill in early summer 2013.
» Business, Financial Services, and Insurance
“Marketplace Fairness Act Headed to Vote”The Senate formally began debate on the Marketplace Fairness Act, which, if passed, would allow states to more easily collect sales tax on internet purchases. A vote is currently scheduled for May 6. The bill previously passed a symbolic vote in March by 75-24 and with bipartisan support.
“Proposed Changes to Municipal Bonds”
Tax-exempt municipal bonds are affected by the recent budget proposals. Federal tax exemption on interest earned from municipal bonds has been in place since the federal income tax was established in 1913. The President has proposed to enact a 28% cap on this exemption as one way to raise revenue.
Critics have assailed the President’s move to limit the tax-exempt status of municipal bonds, arguing it could raise borrowing costs for states and municipalities offering such bonds, as investors seek higher returns to compensate for anticipated taxes they could incur. A report from the National Association of Counties, National League of Cities, and the U.S. Conference of Mayors says that had the cap been in effect during the last decade, it would have cost states and localities an additional $173 billion in interest expenses. These bonds are the primary financing tool for most public infrastructure needs, including highways, bridges, water and sewer, and local streets. Municipal bonds currently fund more than $3.7 trillion in infrastructure projects.
Treasury Secretary Jack Lew testified during his nomination hearing in February that the President’s intent was not to specifically target municipal bonds but to levy a 28% cap on all tax benefits (down from 35%) for top 2% of income earners and prevent reduction of their tax liabilities. The Congressional Budget Office estimated the federal government missed out on $30 billion in tax revenue in 2011 alone due to the exemption.
» Energy, Transportation, and Environment
“Water Resources Development Act Sails Out of Committee”The Senate Environment and Public Works Committee unanimously passed the Water Resources Development Act (WRDA), which authorizes the U.S. Army Corps of Engineers to engage in projects such as flood control, water navigation, ecosystem restoration, dredging, water supply, and emergency management. This new reauthorization streamlines projects and sets up a pilot program that allows state and local governments to oversee Corps-authorized projects. The committee also passed the Water Infrastructure Finance and Innovation Act of 2013. This bill establishes another pilot program to assess the ability of innovative financing tools to leverage private monies to fund water infrastructure projects. The Senate is expected to bring the legislation to the floor in early May.
President Obama submitted his FY2014 Budget Request on April 10, 2013. This request included a traditional budget with program spending recommendations, and a supplemental outline to reduce the federal deficit by $1.8 trillion over the next 10 years. This deficit reduction package has also been proposed to replace the 2013 sequester cuts.
Notable proposals in President Obama’s budget include $75 billion “Preschool for All” Initiative, which would provide funds to states to expand access to pre-kindergarten for lower-income children:
The President’s deficit reduction proposal is composed of spending reductions in healthcare, benefits, and discretionary spending, as well as revenue increases. The revenue increases are projected to come from closing tax loopholes for high-income taxpayers. The President also seeks to reduce payments under Medicare parts B and D, and to increase the use of generics under Part D. The President’s deficit reduction plan also estimates savings in benefits like Social Security by setting the cost of living increase calculations to a Chained Consumer Price Index (Chained CPI), which generally increases more slowly than current formulas.
The Senate budget closely resembles the President’s budget, but has several key distinctions including blocking Chained CPI, and increasing funding for home heating fuel assistance for low-income individuals (LIHEAP). The primary aim of the House budget is to reduce federal spending and balance the budget by 2023. House budget proposes to do this by lowering taxes and making significant reductions and revisions to current federal programs.
Click here to read NBCSL’s special overview of the FY 2014 budget with a detailed explanation of each budget presented by the Senate, House, and President.
Notable proposals in President Obama’s budget include $75 billion “Preschool for All” Initiative, which would provide funds to states to expand access to pre-kindergarten for lower-income children:
- $15 billion to extend home visitation services
- $1.6 billion to expand Early Head Start
- $300 million for Promise Neighborhoods
- $400 million for Choice Neighborhoods
The President’s deficit reduction proposal is composed of spending reductions in healthcare, benefits, and discretionary spending, as well as revenue increases. The revenue increases are projected to come from closing tax loopholes for high-income taxpayers. The President also seeks to reduce payments under Medicare parts B and D, and to increase the use of generics under Part D. The President’s deficit reduction plan also estimates savings in benefits like Social Security by setting the cost of living increase calculations to a Chained Consumer Price Index (Chained CPI), which generally increases more slowly than current formulas.
The Senate budget closely resembles the President’s budget, but has several key distinctions including blocking Chained CPI, and increasing funding for home heating fuel assistance for low-income individuals (LIHEAP). The primary aim of the House budget is to reduce federal spending and balance the budget by 2023. House budget proposes to do this by lowering taxes and making significant reductions and revisions to current federal programs.
Click here to read NBCSL’s special overview of the FY 2014 budget with a detailed explanation of each budget presented by the Senate, House, and President.
What’s Happening This Month?
- Armed Forces Day- Celebrated this year on May 18, this holiday signifies the unification of all branches of the military. President Harry S. Truman led the effort to establish a single holiday for citizens to come together and thank our military members for their patriotic service in support of our country. After consolidation of the military services into the U.S. Department of Defense, the holiday was first observed in 1950 and replaced individual military holiday days such as Navy Day or Coast Guard Day.
- National High Blood Pressure Education Month and Stroke Awareness Month – May is celebrated by the health community as National High Blood Pressure Education and Stroke Awareness Month. In an official statement, Secretary of the Department of Health and Human Services, Kathleen Sebelius said, “It makes sense to observe both in the same month because when you control your blood pressure, you reduce your risk of stroke —the fourth leading cause of death in the United States.” This issue is of special importance to African Americans as they are at particular risk—often having more severe hypertension and developing it at younger ages.
- Teen Pregnancy Prevention Month – May is observed as National Teen Pregnancy Prevention Month. According to the Centers for Disease Control and Prevention, while teen pregnancy has declined, nearly 67,000 of the 365,000 teen births in 2010 were repeat teen births. American Indian and Alaskan Natives, Hispanics, and Black teens are 1.5 times more likely than non-Hispanic White teens to have a repeat teen birth. Public Health practitioners, activists, and lawmakers now focus on addressing repeat pregnancies in order to improve the overall quality of America’s youth.
- Memorial Day is a federal holiday observed annually on the last Monday of May to remember the men and women who died while serving in the United States Armed Forces. Formerly known as Decoration Day, it originated after the American Civil War to commemorate the fallen Union soldiers of the Civil War. By the 20th century, Memorial Day had been extended to honor all Americans who have died in all wars.