THIS WEEK ON THE HILL

The President's proposed $2.7 trillion FY 2007 budget was released today, and numerous congressional hearings have been scheduled this week on the proposal. The budget, similar to the FY 2006 budget, calls for the consolidation or elimination of 141 programs, which would save $14.5 billion. Increases for defense and homeland security have been recommended and curbing Medicare costs for a savings of $36 billion over five years has been proposed. His budget also contains new initiatives for energy as well as strengthening federal funding for research and development and recruiting new math and science teachers through the American Competitiveness Initiative. Specific information on the budget will be provided on our website within the next few days.

SENATE. Debate on asbestos litigation reform is scheduled to begin today. S. 852 would create a $140 billion trust fund with money from corporate defendants and their insurers to compensate victims of asbestos exposure. Points-of-order are expected to be raised against the measure that will require 60 votes to overcome. Some opponents have voiced concerns regarding the inadequacy of the amount of money in the trust fund.

A bill (still in draft form) that would provide an additional FY 2006 funding for the Low-Income Home Energy Assistance Program (LIHEAP) is also expected. It has been reported that Congress intends to provide an additional $1 billion in FY 2006, with 25 percent appropriated for formula funding and 75 percent appropriated for contingency funding.

HOUSE. The chamber will only meet for one day this week to consider six measures under suspension, as well as a motion to send the tax reconciliation package to conference (H.R. 4297) and name conferees. The Senate passed its version of H.R. 4297 last week. The Senate measure totals $70 billion in tax cuts over five years because the FY 2006 budget resolution allowed the figure to grow once the budget reconciliation package passed. After the House acts, the Senate will name its conferees. There are several differences within the two bills that still need to be resolved. If an agreement cannot be reached on H.R. 4297 before the adoption of a conference report on a FY 2007 budget resolution, the measure will no longer be afforded the procedural protections allowed under the reconciliation process.

Tax Reconciliation Bill Passes Senate

Last week the Senate passed a $70 billion tax reconciliation package by a vote of 66-31. Since the Constitution requires that revenue-related legislation originate in the House, the Senate adopted H.R. 4297, but substituted the language from the Senate bill (S. 2020, originally passed in November) after adopting several amendments.

Several expiring tax provisions were extended to meet the new $70 billion level of the package (over five years), which was enhanced due to passage of the budget reconciliation package on Wednesday, February 1, and the removal of hurricane tax breaks that were dealt with in separate legislation.

SENATE HOLDS HEARING ON MEDICARE PART D IMPLEMENTATION

The Senate Aging Committee held the first hearing on Medicare Part D implementation since the new drug benefit began on January 1, 2006. Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan testified before the committee, giving a progress report on implementation. He also discussed the temporary coverage that states are funding for the dual eligibles and plans to reimburse states for these costs through the Medicare demonstration waiver. The template for the waiver was released late last week. Secretary of Health and Human Services, Mike Leavitt also announced details on the process by which states will be reimbursed for the costs they have incurred for providing temporary coverage for the duals. For more information, please visit the CMS website: www.cms.gov

Last week Secretary Leavitt also released a one-month progress report on the Medicare Prescription Drug benefit, on what is working and what needs improvement within the program. The report details steps undertaken by HHS and health plans, such as extending transition coverage for a beneficiary's current drugs to 90 days and reducing call wait times. The report also includes new estimates showing the costs of the Medicare drug benefit are significantly less than expected. Call wait times for pharmacists and customers according to the Secretary have been "unacceptable" and so he announced efforts to get them reduced. HHS will increase monitoring and reporting of drug plan wait times and will take corrective steps in the specific cases where plans do not improve. Other areas where they will continue to work on include: dealing with late enrollment problems/issues, data translation, pharmacy support (including claims issues), state reimbursement, compliance issues (transition plans as suggested above); and future problems.

CONGRESSMAN JOHN BOEHNER ELECTED AS NEW HOUSE MAJORITY LEADER

Last week, House Republicans elected Congressman John Boehner as their new majority leader. Boehner, a Republican from Ohio served as Chairman of the House Education and Workforce Committee, defeated Rep. John Shadegg and Rep. Roy Blunt. Rep. Blunt will retain his position as Majority Whip and Rep. Adam Putnam was elected chairman of the House Republican Policy Committee, replacing Rep. Shadegg, who stepped down from the position to run for majority leader.

HOUSE PASSES DEFICIT REDUCTION ACT

The House passed the Deficit Reduction Act (S. 1932) by a vote of 216-214 last week, clearing the measure for the President' signature. The vote was the second time the House passed the conference report but was necessary because the Senate stripped three minor provisions from it before passage last December. The bill is estimated to decrease spending by $39 billion over five years.

HEALTH CARE FUNDING FOR VETERANS GIVEN EMERGENCY DESIGNATION

The President designated $1.2 billion in funding for veterans' health care as emergency spending, which allows the funds to be expended in the current fiscal year and outside of the caps on discretionary spending. In passing the FY 2006 appropriations for Military Construction/Veterans Affairs, Congress designated funding for veterans' health as contingent emergency spending, which required the President to designate the funds as emergency spending.

PATRIOT ACT EXTENDED IN THE SENATE

The Senate last week passed a five week extension of the Patriot Act (H.R. 3199) until March 10, 2006. The House passed the extension last week as well. The President is expected to sign.