February 2, 2004

President Bush Releases 2005 Budget
 
President Bush's $2.4 trillion budget for Fiscal Year 2005,  that begins on October 1,  will reflect a budget deficit of $521 billion.  The White House expects to cut the deficit by $237 billion by 2009,  through an effort of trimming domestic spending and eliminating a handful of federal programs.  
In his budget, the President has outlined a 7 percent increase in Defense spending, a 9.7 percent increase in Homeland Security, and a 1 percent increase in spending for non-defense discretionary programs.  Numerous congressional hearings are scheduled this week on the proposal.
A more detailed analysis of the President's budget will be available later this week in a special Nevada/Washington Weekly newsletter and will also be available on our website. 
 
Transportation Bill
 
The Senate is expected to vote today at 5:45 p.m.,  to invoke cloture on the six-year , $311 billion surface transportation bill (S.1072) and debate on the measure is expected to fill the Senate schedule over the next two weeks.  Concerns have been raised by several Senators about donor state allocations, the transit funding mechanism, and the bill's impact on the budget deficit. 
Senator Bill Frist (R-Tenn) has indicated that he will move forward with the consideration.   He has also indicated that portions of the stalled energy bill (H.R. 6) could be attached to the transportation measure.  The Senate Finance Committee is expected to mark-up the financing provisions of the transportation bill later this afternoon with the Senate Banking, Housing, and Urban Affairs Committee expected to mark-up the transit portion tomorrow.  In the House, a mark-up by the Transportation and Infrastructure Committee on their version of the highway bill (H.R. 3550) has been postponed because of unresolved funding issues.
Revenue provisions developed by the Chairman of the Senate Finance Committee, Charles Grassley (R-Iowa) and supported by ranking Democrat Max Baucus (D-Mt) would make up the estimated $35 billion gap between anticipated receipts from the existing gasoline tax and projected spending.  The Grassley plan relies largely on accounting changes involving partial excise tax exemption now granted to ethanol-blended gasoline, effectively shifting future fuel tax receipts from the government's general fund into the Highway Trust Fund.  As promised by Grassley, it does not contemplate an increase in gasoline taxes-a step that leaders of the House Transportation Committee have felt was necessary to help fund the much larger $375 billion highway and mass transit bill they propose.  The Senate Banking, Housing and Urban Affairs Committee has been waiting for action by the Finance panel before it holds its own markup on the $56.5 billion transit portion of the bill that falls under its jurisdiction.  The Senate Environment and Public Works Committee already approved a measure that would cover the bulk of the spending programs in the bill -- $255 billion for a broad range of highway programs - and the Senate Commerce, Science, and Transportation Committee has approved $6.5 billion for the chunk of the measure that falls under its jurisdiction.
The Grassley-Baucus proposal would eliminate the long-standing tax break for ethanol-blended gasoline and subject ethanol fuels to the same 18.4 cent per gallon excise tax that is paid on conventional gasoline.  That would bring $9 billion into the Highway Trust Fund over six years.  To offset the repeal of the ethanol tax break, Grassley would amend the tax code to permit ethanol blenders to qualify for an excise tax credit of 5.2 cents per gallon, based on the volume of ethanol they produce.  This ethanol excise tax credit would be charged against the general fund and not the highway fund.  The Finance proposal would also eliminate the requirement that 2.5 cents per gallon of the federal excise tax on alcohol fuels go into the general fund for deficit reduction. Instead, the full amount of the tax would be credited to the Highway Trust Fund. 
 
House:  Key members of the House Transportation and Infrastructure Committee have struggled to complete a bipartisan bill for consideration by the panel and the full House.  A committee markup tentatively scheduled for next Wednesday has been canceled and not rescheduled.  Chairman of the Committee, Don Young (R-Alaska) said he continued to work with ranking Democrat, James Oberstar (Minn) and other key committee members to achieve a bipartisan bill but said they need additional time to hear from a number of other members and the leadership of the House. The House Science Subcommittee on Environment, Technology and Standards approved a transportation research bill (H.R. 3551) last week that would authorize research and development projects dealing with safety, environmental impact, congestion relief, and technology.
The transportation law expires on February 29. 
 
 
House Judiciary Marks-Up Internet Tobacco Sales Enforcement Act
 
On Wednesday, January 28,  the House Judiciary Committee marked-up the Internet Tobacco Sales Enforcement Act (H.R. 2824) sponsored by Rep. Mark Green (R-Wis) and Rep. Marty Meehan (D-Minn).  The bill is similar to the Senate bill (S. 1177) referred to as the PACT Act, which passed the Senate in December. The House bill would give states additional enforcement powers to collect taxes on tobacco products sold on the Internet by requiring Internet tobacco vendors to collect and remit state excise taxes before delivering the tobacco product.  The bill will likely be passed under suspension but floor action has not been scheduled.  H.R. 2824 passed the committee in the form of a substitute amendment.  Changes were made to the bill including:  1) language that ensures the bill does not affect current state-tribe compacts, 2) tribal governments were given the same enforcement authority under this act as states and 3) states were given additional authority to take action against violators located on tribal land only after a state has notified the U.S. Department of Justice of their intended action. 
During the mark-up, Rep Green clarified that H.R. 2824, if passed, would not serve as a precedent for the Streamlined Sales Tax Agreement.
Senate HELP Committee Holds Hearing on the Uninsured
 
On Wednesday, January 28, the Health, Education, Labor, and Pensions (HELP) Committee held a hearing to examine the problem of the uninsured.  Witnesses from academia, private health plans, and purchasing coalitions, as well as the Congressional Budget Office Director Douglas Holtz-Eakin, offered data about the number of uninsured individuals in this country along with information about the sources of the rising cost of health care.  They reported that between 21 and 31 million Americans are uninsured for a period of longer than one year and that as many as 60 million may be uninsured at some point during this year.  Most of these individuals are from lower-income working families and most have children.  Witnesses also reported that health premiums rose 14 percent last year and that costs are a product of numerous factors, including inefficiency in the system, defensive medicine, over-consumption by patients, chronic disease, and lack of preventive care.  A discussion followed by potential reforms such as changes to medical malpractice laws, the merits of employer-based coverage, the importance of preventive health care, and the need for the Centers for Medicare and Medicaid to develop a system to measure and reward efficiency.
For more information on the hearing and testimony for each of the witnesses, please visit the Senate HELP Committee website:  http://www.senate.gov/~labor/bills/035_bill.html
 
Kaiser Commission Releases State Medicaid Survey
 
The Kaiser Commission on Medicaid and the Uninsured released a survey last week on state Medicaid growth and cost containment actions.  The report indicates that although there is a "relative sense of stability" in state Medicaid programs in FY 2004, state budget pressures are expected to intensify in FY 2005 when the temporary state fiscal relief expires.  The report credits stability in 2004 largely to the $20 billion in state fiscal relief passed by Congress as part of the 2003 economic recovery package.  Another factor was the culmination of several years of cost containment efforts on behalf of states.  Spending growth in Medicaid fell from 11.9 percent in FY 2002 to 8.2 percent in FY 2004, and because of the enhanced federal funding, the growth in the state share of Medicaid will be only 3.3 percent.   The Kaiser survey is available on their website:  http://www.kff.org/
 
 
Department of Homeland Security Unveils National Cyber Alert System
 
The Department of Homeland Security's National Cyber Security Division (NCSD) unveiled the National Cyber Alert System, which is the first coordinated national cyber security system for identifying, analyzing, and prioritizing emerging vulnerabilities and threats.  Managed by the United States Computer Emergency Readiness Team (US-CERT), a partnership between NCSD and the private sector, the National Cyber Alert System provides the first infrastructure for relaying graded computer security updates and warning information to all users.  The NCSD is part of DHS Information Analysis and Infrastructure Protection.  It is charged with coordinating the implementation of the national strategy to secure cyberspace and serves as the single national point of contact for the public and private sector regarding cyber security issues.
 
 
Secretary Ridge Proposes Consolidation of DHS Organizational Units
 
Department of Homeland Security (DHS) Secretary Tom Ridge notified Congress of his intention to consolidate several organizational units within DHS.  The Office of Domestic Preparedness (ODP), currently within the Directorate for Border and Transportation Security, would be consolidated with the Office of State and Local Government Coordination.  The new office will be called the Office of State and Local Government Coordination and Preparedness (SLGCP) and the director of ODP will become Executive Director of the consolidated office, reporting directly to  Secretary Ridge.  Select grand award functions currently exercised by the Under Secretary for Emergency Preparedness and the Administrator of the Transportation Security Administration will be consolidated within the SLGCP.  The purpose of the consolidation is to enhance overall coordination between all of the programs.
 
 
House Passes Bankruptcy Overhaul Bill
 
On Wednesday, January 28, the House passed by a vote of 264-99, the broad bankruptcy reform measure that it passed ten months ago.  The measure, H.R. 965 was adopted as a substitute amendment to a narrower Senate-passed bill, that would provide bankruptcy protections to family farmers.  The intention is to pressure the Senate into a conference on the broader bill. 

Improving Teacher Quality

On January 16, the U.S. Department of Education released a revised and expanded version of the Improving Teacher Quality State Grants Non-Regulatory Guidance.  This guidance incorporates the sections on highly qualified teachers released on September 12, 2003, with recently revised sections that pertain to the administration of the Title II, Part A program.  For more information visit:   http://www.ed.gov/programs/teacherqual/guidance.pdf.
 
Key Committee Meetings
 
President's FY 2005 Budget Proposal
 
*The Senate Budget Committee will hold a hearing on Tuesday, February 3, hearing at 10:00 a.m. in SD-106 Dirksen Senate Office Building with Office of Management and Budget (OMB) Director Joshua Bolten scheduled to testify.  The committee also has scheduled a hearing for Wednesday, February 4 hearing, at 10:00 a.m., in SD-608 Dirksen Senate Office Building with Treasury Secretary John Snow scheduled to testify.
 
* The House Budget Committee will hold a hearing on Tuesday, February, 3, at 2:00 p.m., in 210 Cannon House Office Building with OMB Director Bolten and Economic Advisors Chairman Nicholas Gregory Mankiw scheduled to testify. 
 
*The House Ways and Means Committee will hold a hearing on Tuesday, February 3, at 2:00 p.m., in 1100 Longworth House Office Building with Treasury Secretary Snow and another hearing on Wednesday, February 4, at 10:30 a.m., in 1100 Longworth with OMB Director Bolten.
 
*The Senate Finance Committee will hold  a hearing on Tuesday, February 3, with Secretary Snow, followed by a hearing on Wednesday, February 4 with U.S. Secretary of Health and Human Services, Tommy Thompson at 10:00 a.m. in SD-215 Dirksen Senate Office Building.
 
Telecommunications:  The House Energy and Commerce Subcommittee on Telecommunications and the Internet has scheduled a Wednesday, February 4, hearing at 1:15 p.m. in 2322 Rayburn House Office Building on the current state of competition in the communications marketplace.
 
Transportation Research:  The House Science Committee will hold a Wednesday, February 4, markup of a $4 billion surface transportation research bill (H.R. 3551) at 1:00 p.m. in 2318 Rayburn House Office Building.