ASBA Update From Washington

As an ASBA member, you now have free access to news and updates on important issues from our legislative team in Washington DC.

October 2007
by James C. Musser, ASBA Washington Representative

Bubble, bubble, toil and trouble! Shakespeare's witches would be right at home in our nation's capital with all of the legislative battles that are currently brewing. The new fiscal year started on the first day of October but Congress has failed to pass a single spending bill as it is required to, the president vetoed the State Children's Health Insurance Program (SCHIP) and Democratic leaders are talking about a big tax increase but there is a ray of hope on the budget deficit. These issues make up October's spooky report from Washington.

Budget/Spending: Although Democrats had criticized Republicans in the 2006 elections for failing to handle the annual spending bills on time, it seems that failure to pass the annual appropriations to fund the government is a bi-partisan malady. Congress has failed to pass even one of the thirteen annual spending bills that fund everything from defense spending to education, transportation, health care and all the other functions of government. The president has threatened to veto any all-in-one spending bill that rolls all of the spending into one giant piece of legislation that is so large that nobody is able to know everything that is in it. These so called "omnibus bills" have been used in the past to conceal huge spending increases that deepen the national debt and result in annual deficits. The president has called on congressional leaders to send him individual spending bills that can be vetted for over-spending; but, with Congress already proposing an additional $22 billion above the increases in the president's budget, a veto fight is almost certain before the end of the year.

Health Care: As reported on this page in August, the president carried out his threat to veto the SCHIP bill spending increase. The SCHIP program is supposed to provide health insurance for the children of the working poor but Congress has attempted to expand it to include families that make as much as $83,000 and defined "child" as a person up to twenty-five years of age.

As it originated in the House, the bill was to be funded by gutting $50 billion from the Medicare Advantage Program. In the Senate a bi-partisan group of Senators led by Senator Mitch McConnell (R-KY) and Finance Committee Chairman Max Baucus (D-MT) and Finance Ranking Republican Charles Grassley (R-IA) agreed to strip out the Medicare provision. Even though the Medicare provisions were taken out and the Medicare Advantage program was saved, the bill still allowed families making high incomes, illegal aliens and people up to age twenty-five to access the program. In his veto message of the expansion of the bill, the president indicated that he was not quibbling over the amount of money to be spent on poor children but that poor children were supposed to be the beneficiaries of the program not middle class adults.

Speaker of the House, Nancy Pelosi (D-CA) has vowed to over-ride the veto but it looks unlikely at this time. Support for the over-ride is shaky in the House and even less likely in the Senate. The president has called on Congress to present him with a bill truly aimed at helping poor children first.

Taxes: Chairman Charles Rangel (D-NY) of the tax-writing House Ways and Means Committee has been floating trial balloons for what has been dubbed the "mother" of all tax reforms. The buzz indicates the bill could carry a price tag as high as one trillion dollars ($1,000,000,000,000) in what Rangel describes as an effort to add "fairness" to the tax code while simplifying the code and encouraging economic investment. Most Washington insiders suspect there will be little if any effort to push such a large bill this year but expect Rangel to continue feeling out his colleagues for action next year.

Budget II: Another reason President Bush is talking about vetoing an omnibus spending bill is because of the progress his budget and tax policies are having on reducing the budget deficit. Treasury Secretary Henry Paulson and Office of Management and Budget Director Jim Nussle announced the budget deficit has further declined from the mid-session estimate made in June from $205 billion to $163 billion. The actual deficit last year was $248 billion. A deficit of $163 billion represents just 1.2% of our Gross Domestic Product, the output of all goods and services produced in the country, well below the 40-year average of 2.4%. The president has repeatedly said that he does not want Congress to increase spending levels above the amounts already budgeted so that the budget will stay on course to being balanced.

ASBA closely monitors all the issues affecting seniors and small business owners. Check back each month for the latest from our nation's capital.

James C. Musser, Esq. is a legislative consultant based in Falls Church, Virginia. His reports are updated monthly.