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Congressional Budget Watch May 26

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Congressional Budget Watch -- This Week in Congress

It was an interesting week in Congress on the budget front – not for legislation that was passed but for setting the stage for budget fights to come.  Lesson: keep your eye on the big picture.

Congressional Budget Office:  On May 22, the Congressional Budget Office (CBO) released new budget estimates that projected a “fiscal cliff effect.”  What’s that? It is best thought of as the perfect storm with a number of expiring tax provisions at the end of the year combined with the impact of automatic spending cuts in January 2013, which CBO projects (if unaddressed) would lead the nation into a recession. The CBO paper, “Economic Effects of Reducing the Fiscal Restraint that is Scheduled to Occur in 2013,” projects that the “cliff effect” will weaken the economy causing lower taxable income (resulting in further reduced revenue) and an increase in spending due to higher unemployment (likely resulting in increases in unemployment compensation, food stamps, and Medicaid designed to compensate for the impact of a weaker economy on individuals).

Senate Republican Marker: A letter signed by 41 Senate Republicans to Majority Leader Harry Reid (D-NV) urged immediate action on extending the Bush tax cuts that expire at the end of the year. (Congressional Republicans want to extend the tax cuts for everyone; Congressional Democrats want to extend the tax breaks for all families except millionaires).

Senate Democrat Marker:  Senate Majority Leader Reid responded in a letter that he did not see a way to reach bipartisan agreement on deficit reduction or taxes before the November elections. Reid’s letter was based on the premise that any deficit reduction needed to be a balance of spending cuts and revenue increases (ie, allowing the tax cuts to expire for millionaires but not for other families).

More Markers:  The House leadership released its agenda for June and the summer months. In addition to appropriation bills and measures focused on job creation, the House agenda lists consideration of Rep. Griffin’s legislation (HR 4078), which would prohibit new federal regulations (except for health and emergency) until unemployment drops below 6 percent nationally. The Senate leadership released its agenda for the summer, which also lists appropriation bills and measures focused on job creation. Neither agenda specifically listed the FY2013 Labor, HHS and Education Appropriations bill, which funds child care and early learning programs.

Stalled Bills:  The House and Senate remain stalled on moving to conference on the House and Senate versions of legislation designed to prevent the interest rate from doubling on student loans (from 3.4 percent to 6.8 percent) on July 1.  The House and Senate remain stalled on moving to conference on legislation to reauthorize the Violence Against Women Act. The Senate has scheduled a cloture vote for Tuesday, June 5th to proceed to consider S. 3220, the Paycheck Fairness Act, legislation introduced by Senator Mikulski that would prohibit employers from paying different wages based on an employee’s gender and enable women to receive punitive damages in sex discrimination cases.  A studyby the American Association of University Women (AAUW) found that women earn 77 cents for every dollar men earn for the same or equivalent positions.