Supporters of the AmeriCorps program have conceded that they have been unsuccessful in their attempts to obtain an emergency $100 million appropriations. House and Senate negotiators have left funding for AmeriCorps out of a package of $937 million in supplemental funds.

Supporters had been seeking the funding in order to pay for the 20,000 of the 50,000 unfunded volunteer slots. The 20,000 slots were unfunded due to financial management problems at the Corporation for National and Community Service. AmeriCorps supporters will encourage Congress to approve President Bush’s request for $433 million for AmeriCorps in fiscal year 2004 which would expand the program to 75,000 volunteers.

We have reported in recent weeks that prospects for TANF reauthorization this year are dim. House leaders confirmed this on September 16 when they said they do not expect the Senate to act on welfare reform reauthorization before the end of the year. The 1996 landmark bill, which created the Temporary Aid for Needy Families (TANF) program expired last year, and Congress authorized an extension after lawmakers were unable to pass a new welfare reform bill before the expiration date. In February, the House passed a welfare reform reauthorization bill (H.R. 4) sponsored by Rep. Deborah Pryce (R-Ohio) and the bill was referred to the Senate Committee on Finance. Last week, the F inance C ommittee reported out a substitute to H.R. 4 by a vote of 9-8 and that bill is now awaiting consideration by the full Senate.

It's unlikely that the full Senate will act on the bill before September 30th, when the current extension bill expires. Reports indicate that there is some discontent among Senate moderates regarding the level of funding for childcare in the bill. Committee Chairman Charles Grassley (R-Iowa) reportedly promised Sen. Olympia Snowe (R-Maine) to address childcare funding when the bill reaches the floor. With the lengthy debate that is likely to ensue on the Senate floor, it's unlikely the Senate will act expediently on welfare reform. In addition to working on TANF reauthorization, the Senate also has to complete work on appropriations, deal with the Iraq request and to address Medicare overhaul.

Besides childcare funding, some lawmakers are concerned about a provision in the bill that would increase work requirements for most welfare recipients from 30 hours per week to as much as 40 hours per week.

On September 17, the Senate Finance Committee will markup a bill extending authority for expenditures made out of the highway trust fund. The bill will extend authority for five months, allowing transportation authorizers more time to craft a successor to TEA-21, which is set to expire on September 30. In conjunction with the extension bill, the committee will also consider the Volumetric Ethanol Excise Tax Credit Act (VEETC) of 2003 (S. 1548), originally proposed by Committee Chairman Charles Grassley (R-Iowa).

VEETC would make changes to tax collection laws, allowing the highway trust to derive additional revenues. Currently, conventional gasoline is taxed at 18.4 cents per gallon, with all proceeds being deposited in the highway trust fund. On the contrary, ethanol, an oxygenate produced from corn, which is used to reduce fuel emissions, is taxed at a rate of 13.2 cents per gallon, with 2.5 cents being siphoned off by the transportation general fund. The Grassley bill would transfer the 2.5 cents from the general fund to the highway trust fund, raising an estimated $600 million in additional revenue for the trust fund.

Additionally, VEETC would attempt to close tax collection loopholes that some gasoline purchasers have used to avoid paying the full tax rate. Some gas companies, who blend their gasoline with ethanol, pay a reduced tax rate of 13.2 cents per gallon. Gas companies are not required to blend their gasoline with ethanol at the point of purchase if they promise to later blend it. However, many gas companies never blend it, shortchanging the government in the process because of the reduced tax rate. Senate Finance Committee aides believe there exist strong evidence which suggests that companies are engaging in this deceitful practice and reneging on their promise to blend the purchased gasoline with ethanol. Grassley’s bill would do away with the “honor system” and force would-be buyers of most alcohol-blended fuels to pay the full 18.4 cent per gallon tax up front, which would allow the government to collect the money immediately. If a blender can prove they added a gallon of ethanol to the gasoline, they would have two options: take an excise tax credit or file for a tax refund. A tax refund would only be granted if the refiner does not owe the government any money. With the elimination of a 5.2 cent tax incentive, the highway trust fund is expected to earn an additional $1.2 billion in revenue annually. It is believed that the general fund will pay for the tax credit.

There exists much support for VEETC, with 36 associations representing transportation, engineering, business, corn growers, and farmers all supporting the bill. In the Senate, the bill has already received strong bi-partisan support. The Senate majority leader, minority leader, and chairmen and ranking members of the Senate Environment and Public Works and Energy and Natural Resources committees are all cosponsoring the bill. However, ethanol production supporters are unsure of whether House Ways and Means Chairman Bill Thomas (R-California) will go along with VEETC if the proposal reaches the House. Thomas would likely be uneasy about allowing ethanol, which is mainly produced in the Midwest, to be the lone market oxygenate, since the chairman is from a coastal state. If Thomas stands in the way of revising ethanol tax collection laws, the issue will likely be revisited when a six-year surface transportation reauthorization bill is considered next year.

On September 18, the Senate Environment and Public Works Committee will follow the lead of the finance committee and mark up their portion of the TEA-21 extension bill.

The current appropriations bill to finance the departments of Transportation and Treasury (HR 2989, S 1589) has run into a series of problems stemming from the new Homeland Security Department appropriations bill. In order to keep the number of appropriations measures at the status quo, the Transportation and Treasury-Postal Service appropriations were merged into one, causing numerous headaches for lawmakers.

The administration has threatened to veto the legislation if two provisions survive a House/Senate conference, which itself can't begin until the Senate passes the measure. The Senate's work must be completed before the end of the fiscal year, October 1.

The first provision invoking a veto threat involves the President's push to privatize thousands of federal jobs. The House amended the bill by a vote of 227-188 to prevent the Office of Management and Budget (OMB) from implementing a measure to outsource up to 15% of all federal jobs by the end of September. In previous years, OMB wasn't tied to transportation money, so a veto threat wouldn't implicate funds for highway, transit and railroad programs. This year, though, the threatened veto had direct consequences, as Ernest Istook, (R-Oklahoma), the chairman of the Appropriations subcommittee warned colleagues, "If this bill were to be vetoed . . . bulldozers across the country would stop." The Senate version of the bill fails to contain any language regarding outsourcing.

The other provision which attracted a veto threat from the President was an amendment proposed by Jeff Flake (R-Arizona) and Jim McGovern (D-Massachusetts) which would lift the current ban on travel to Cuba. The amendment passed 227-188 with 53 Republicans voting for it and 22 Democrats voting in the negative. The House leadership and the administration remained committed to preventing this measure from becoming law, although Senate support is unknown. In the past, lifting the travel ban has made it from the House and Senate into the conference only to be dropped once there.

Many transportation supporters remained wary of the bill despite the lopsided 381-39 vote in the House on September 9. It remains to be seen whether changes will creep into the Senate version, when it emerges from conference, or if it passes as it stands now, whether the administration will follow through on its veto promise.

This week leaders of key congressional committees dealing with the reauthorization of TEA-21 finally admitted to themselves and the world at large that the time has come to drop the idea of doing a six-year bill this year and focus on an extension. A consensus appears to have been reached on a five-month extension (through February 29). Why five months and not six? It seems the answer is that if Congress is able to get something done in five months, their bill will be completed before the March 15 deadline (not always met) for the Budget Committees to report out a fiscal 2005 budget. There is concern the Budget Committees may use the absence of a reauthorization to push for the elimination of the “firewalls” in TEA-21 that ensure highway trust fund dollars are not held back in order to make the Federal deficit appear smaller.

Most observers believe a five-month extension will be followed by another extension that will carry through at least until September 30, 2004. The Senate Committee on Environment and Public Works is trying to prevent this by pushing for language in the five-month extension which would preclude an additional extension. The House is fighting hard to prevent such a provision because of the high risk of a program lapse resulting from it.

For its part, the House committee is causing controversy by trying to insert language which would give the states free rein during the extension period to allocate federal-aid highway dollars among the various programs as they see fit. Theoretically, a state could use that authority to use its five-month allocation 100% for the National Highway System and make STP and CMAQ, for example, wait until after the extension period to be made whole. Needless to say, this proposal has supporters of STP and CMAQ up in arms.

The strategy leaders are trying to follow is that there would be agreement between House and Senate committees on the extension bill, it would be passed by the House under Suspension of the Rules (i.e. no amendments allowed) and then the Senate would pass it by unanimous consent. Obviously, these sticking points will need to be removed before this approach can work.

The Senate Finance Committee has approved a welfare reform reauthorization bill by a party line vote, 9-8. A summary of the committee’s actions follow.

Several amendments were incorporated into the revised Chairman’s mark. The Chairman’s mark was used as the base bill for the markup. They include the following:

• The ten state demonstration initiative included in Sec. 114 was limited to TANF, SSBG and CCDF.
• States will be required to make a good faith effort to consult with families prior to the imposition of a sanction.
• The provision allowing 3 months out of 24 months of barrier removal activities to count toward work participation rates was expanded to 6 months.
• States that provide transportation assistance must include a reference to the planning process for such assistance in their TANF state plans.
• States could claim “extra credit” toward meeting work participation rates for any work hours beyond 34.

There were three amendments that adopted in the committee markup. They are: the Snowe amendment to allow states to count postsecondary and vocational education as an approved work activity, the Jeffords amendment to establish a low-income car ownership program and the Breaux amendment to make several modifications/simplifications to TMA.

Amendments that failed or were withdrawn include the following:

• To increase child care funding by $11 billion, failed by a vote of 9-11
• To clarify that state and local governments may provide health services to immigrants with their own revenue, failed by voice vote.
• To maintain current 20 hour work requirement for mothers with children under the age of six, failed by voice vote.
• To make changes to the current ban on TANF and food stamp benefits for convicted felons, withdrawn with an understanding that Sen. Santorum will work with Sen. Grassley to modify the language and incorporate it into the bill for floor consideration.
• To allow states to get partial credit toward meeting work participation rates beginning at 15 hours, failed by voice vote.
• To extend the QI-1 program, withdrawn with an understanding that Sen. Grassley will work with Sen. Bingaman to ensure that the program is extended.
• To strike the funds for marriage promotion and use them for child care instead, failed by voice vote.
• To approve the welfare reform bill as passed by the Senate Finance Committee last year, failed by a vote of 10-10.

On September 9th, the Senate Committee on Commerce, Science and Transportation convened to hear testimony from federal transportation security officials. The following witnesses appeared at the behest of Committee Chairman John McCain (R-Arizona) to offer their expertise on transportation security matters: Jeffrey Shane, Undersecretary of Transportation at DOT, Admiral Thomas Collins, Commandant of the U.S. Coast Guard, Robert Bonner, Commissioner of Customs and Border Protection, Admiral James Loy, Administrator of the Transportation Security Administration and Peter Guerrero, Director of the Physical Infrastructure Team for the General Accounting Office.

Chairman McCain made a brief opening statement before leaving for another committee hearing. Senator McCain began by saying that “much has been accomplished over the last two years, and I think many would agree that transportation security is at its highest level ever, particularly aviation security.” However, McCain cautioned transportation security officials and the traveling public not to be complacent about the current level of aviation security, but rather to keep striving for better security in all modes of transportation, especially ground transportation. “With respect to ground transportation we need to make sure that independent actions initiated so far by TSA, DOT and industry are followed up with a systematic program of security enhancements based on each other’s particular needs”, said McCain. McCain admonished the witnesses that railroads and pipelines have extensive unprotected networks and that highways and transit systems continue to have vulnerabilities. The Chairman concluded his remarks by saying that the Department of Homeland Security (DHS) and DOT need to better coordinate their actions.

Committee Ranking Member Ernest Hollings (D-South Carolina) was more apocalyptic about transportation security than Chairman McCain. While acknowledging that aviation security has improved, Senator Hollings feels that more funding is still needed. Hollings commented to the witnesses that “your (witnesses) agencies have a long way to go before you can claim integration or that you’ve overcome petty bureaucracies.” Additionally, Hollings exhorted the witnesses that the Bush Administration was not serious enough about enhancing port security. With regard to rail security, Hollings feels the administration must devise a more thorough and comprehensive plan. Hollings concluded his remarks by stating that “right now, our transportation system remains vulnerable and the threat risk is high. This is placing increased demands on government and it requires substantial public resources to meet these demands.”

Jeffrey Shane, Undersecretary of Transportation Policy at DOT, was careful to remind the committee that transportation-related industries account for approximately 11% of the nation’s GDP and 8% of our workforce. With aviation security getting most of the attention from federal transportation security officials, Shane wanted to make it clear that federal agencies responsible for transportation security were closely examining all modes of transportation. “While most of the focus since September 11th has been on aviation security, and rightfully so, the Department has also been doing a great deal of work with our DHS counterparts in assessing the vulnerabilities and improving the security of other modes of transportation,” said Shane.

Regarding port security, Shane said the Maritime Administration has worked closely with the Coast Guard and TSA to evaluate port security and to administer port security grants totaling $262 million. Also, Shane commented that the Federal Transit Administration was given $30 million to conduct vulnerability assessments and to provide security training to transit operators throughout the country. Shane added that the Research and Special Programs Administration continues to work very closely and cooperatively with the TSA to ensure that transporters of hazardous materials comply with safety and security requirements.

Undersecretary Shane was careful to mention that DOT ties with the Coast Guard and TSA has fostered the cooperative relationship of DOT and DHS. Shane told the committee he meets with TSA staff on a bi-weekly basis. “These meetings give us the opportunity to coordinate our activities, identify potential issues or problem areas, and ensure that we are providing all the support we can to help TSA in securing our nation’s transportation system”, added Shane. The Undersecretary assured committee members that DHS and DOT would continue working closely together and signing agreements divvying up security responsibilities for different modes of transportation.

Regarding administrative matters, Shane told the committee that DOT has designated the Office of Intelligence and Security as a formal point of contact for federal agencies dealing with security matters that need information about the national transportation system. Shane closed by saying, “to effectively integrate into transportation decision-making, five enduring functions remain within DOT: security policy development; transportation system design; intelligence; operations; and readiness, including plans and exercises.

Robert C. Bonner, Commissioner of Customs and Border Protection (CBP) at the Department of Homeland Security, told the committee that the CBP was responsible for securing the nation’s entire border, including 300 seaports. CBP was formed on March 1, 2003 with the merger of most of the U.S. Customs Service with immigration inspectors and the U.S. Border Patrol of the former Immigration and Naturalization Service. Bonner commented that CBP will no longer just train immigration or border officers, but CBP officers, who will be trained and equipped to perform all CBP inspections. Bonner added “we view our border as the last line of defense for the America people, not the first line. Our effort to secure the flow of people and cargo is many layered, and starts in many places.”

Admiral James Loy, Administrator of TSA, expressed confidence that national transportation security was improving. “I feel confident in assuring you and the American people that the civil aviation sector and the larger transportation sector is more secure today then it has ever been and it will continue to become even more secure as we mature our complementary system of systems.” Admiral Loy told the committee that intelligence captured from terrorists home and abroad has allowed TSA to help the FAA, local airports and commercial airlines better deal with terrorist threats. Loy stated that well-trained TSA baggage screeners and new screening technology have lead to the arrest of nearly 800 people at security check points and the interception of over 4 million prohibited items since November 2002. Additionally, to increase aviation security, Loy mentioned that after 9/11 the Federal Air Marshal Service increased in size from dozens of agents to thousands. Further lauding TSA efforts to enhance transportation security, Loy was careful to point out that his agency was instrumental in the certifying, purchasing, manufacturing and installation of nearly 1,000 explosive detection systems and 5,300 explosives trace detection machines at more than 400 airports throughout the country. Loy also commented briefly on bus security, which other witnesses made little mention of. Admiral Loy said that the Federal Motor Carrier Safety Administration and FTA helped TSA announce the awarding of 60 grants for 67 bus security projects totaling $20 million.

Admiral Thomas H. Collins, Commandant of the United States Coast Guard, recapitulated his agency’s maritime homeland security strategy for the committee. Admiral Collins told the committee his agency’s strategy was based on four important principles: increasing our maritime domain awareness; implementing preventative measures to detect and deter, securing our borders and protecting vital infrastructure; and preparing to respond quickly if necessary. Collins made clear that the Coast Guard, being the lead agency for maritime security, is responsible for implementing the core security regulations approved by the Maritime Transportation Security Act of 2002.

Conferees to the Medicare Prescription Drug bill agreed on the details of an interim drug discount card that would help beneficiaries save money until a full Medicare prescription drug benefit is available.

The interim drug discount card would be made available no later than six months after the Medicare bill was enacted. Pharmaceutical benefit managers, drug manufacturers, retail pharmacies and insurers are among the entities that could offer a drug card. Individuals could sign up for only one Medicare endorsed card at a time, but could change their card once in the 18-month period that cards would be available.

The government would provide up to $600 per year to help certain low-income beneficiaries buy their drugs, but they would also be required to make co-payments. Eligible beneficiaries below the federal poverty line would have 5% co-pay, while eligible beneficiaries between 101% and 135% of the federal poverty level would have a 10% co-payment.

Also agreed to were provisions calling for electronic prescriptions, intended to both cut down on medication errors due to physicians’ poor handwriting and make it easier to cross-check drugs for potential interactions.

Deep divisions still exist between the House and Senate prescription drug bills for example, in areas such as the role private health plans will play in a revamped Medicare system and whether the federal government should step in to provide coverage in certain geographic regions in private insurers fail to do so.

This morning the Senate voted 54-45 to block the Bush administration from issuing new overtime policies. The Harkin (D-Iowa) amendment to the Labor-HHS Appropriations Bill would prevent new Labor Department rules from taking effect. According to organized labor and Senate Democrats, the new policies would have taken money from millions of workers. The amendment would not alter part of the new rules proposed by the administration which would extend overtime to 1.3 million additional low-income Americans.

The House passed all of the administration’s new rules earlier this year leaving its fate to what comes out of conference negotiations between the House and the Senate.

The voting was primarily along party lines, although 6 Republicans voted with the Democrats and Democratic Senator Zell Miller (D-Georgia) voted with the Republicans.

The 1996 welfare law is soon to be reauthorized. On Monday, the Chairman of the Senate Finance Committee, Charles Grassley (R-Iowa), introduced legislation to begin the reauthorization process.

Grassley’s proposal comes after reaching an agreement with moderate Republican Senator Olympia Snowe (R-Maine). Compared to the counterpart measure passed in the House (HR 4), Senator Grassley’s proposal does not demand as much from the two million families nationwide that receive financial assistance. Grassley came to agreement with Snowe at the beginning of the month and allowed her to speak first on the Senate floor regarding a childcare amendment she has sponsored. Grassley initially expressed concerns claiming that more conservative Senators on his committee would not vote for an increase in child care funds.

Last year, child care grants to the states totaled approximately $4.8 billion. Aides to Senator Snowe allege that she is working to increase funding with the understanding that this would be paid for by offsets. There are estimates that Snowe’s amendment could cost between $6 billion and $7 billion. In comparison, the House measure calls for an increase of only $1 billion for child care.

In 1996, the landmark welfare law put an end to 60 years of guaranteed government assistance and put in place work requirements allowing states more flexibility. Proponents claim that caseloads were reduced by about half, but skeptics claim that this was due in large part because of the strong economy.

The 1996 law required participants to work 30 hours a week or 20 hours if participants had children under six years old. Grassley calls for 34 hours for recipients and 24 for hours for recipients with children six years old or younger.

The Administration takes a platform closely aligned with the House measure that calls for increasing the requirement to 40 hours of work a week. Most Senate Democrats are reputed to oppose the measure because they are angry that the child care money will be excluded. Some Democratic senators are calling for as much as $11 billion for child care over the next five years.

In step with the Administration, Senate and House proposals include $200 million in federal dollars to promote marriage.

The Senate Finance Committee is scheduled to markup the welfare reauthorization bill tomorrow September 10th.

Head over to the analysis side of our website for a comprehensive list of all the transportation earmarks of interest just released late last night by the Senate Appropriations Committee. We'll keep the numbers up to date as we learn any additional information, but for now, the list is right here!

Congress has been back in Washington for a week and the leaders of the House and Senate have had the opportunity to speak with their colleagues as they return from visiting constituents and to assess the challenges ahead for various pieces of legislation. The result of these conversations and assessment is a scaled-back agenda for the remainder of this session of Congress.

As our clients and friends have come to know, because of the close margin between the parties in the Senate and the peculiarities of that institution generally, it is the leadership of the Senate that has the strongest role in the setting the agenda for Congress. Based on our contact with leadershpi staff and others on the Senate side in the last week, we believe the list of "must do" legislation has now shrunk to include only the thirteen annual spending bills for fiscal 2004, the "supplemental" appropriation which has been pending for months and the expected request from the White House for additional funding for the war on terrorism in Iraq and Afghanistan.

The two major pieces of pending legislation besides appropriations bills are the energy bill and the Medicare prescription drug benefit legislation. Leadership staff in the Senate now counts these two bills as "probable" but not essential at this time. This is a newsworthy shift, particularly since Dr. Bill Frist, the Senate Majority Leader, has invested so much of his own credibility in the enactment of the prescriptin drug legislation.

The perceived demotion of these two bills from "must have" status should not be construed as an admission of defeat. In fact, talking about them in this way may be an effort by the leadership to send a "wake up" call to those who dearly want one or both of those bills enacted.

The adjournment target, now said to be Veterans' Day, does leave time for these two pieces of legislation to be enacted. However, each has its own problems and neither will be easy to complete.

Leadership has also identified legislation which will not come to thte floor of the Senate unless they represent consensus products on which time agreements can be reached and a strong majority ensured. Legislation falling into that categoy includes TEA-21 Reauthorization, Workforce Investment Act reauthorization and the TANF (welfare reform) reauthorization.

Of course, other legislation may find its way through the process if it is non-controversial. Short-term extensions of TANF and TEA 21 would be examples of such legislation.

In the weeks ahead we will be monitoring the process on Capitol Hill closely. Changes in the schedule may occur, but it appears the agenda now taking shape will provide challenges enough to fill the next two months.

On Tuesday, the House will likely wrap up debate on the FY 2004 Transportation-Treasury spending bill. The House began consideration of the $86.9 billion package last Thursday. The bill will provide $33.8 billion in funding for highway programs, $7.2 billion for transit programs and $3.4 billion for airport construction investment.

Of controversy in the House bill is the $900 million in funding approved for Amtrak in committee, which is what the President requested in his budget. Amtrak supporters in the House contend that the railroad needs $1.82 billion to survive another year, but so far some House appropriators have been unwilling to provide the railroad with additional funding beyond the President’s request. This past Thursday there was a flurry of activity on the House floor centered on Amtrak's FY04 funding level. First, two amendments that would have decreased Amtrak's funding level were defeated. Rep. Tancredo (R-Colorado) offered an amendment to cut Amtrak's FY04 level by $320 million to $580 million. Close observers of the FY04 appropriations debate will recognize $580 million as the number included in Chairman Istook's original FY04 Transportation-Treasury markup. That amendment was defeated 90-322. Rep. Kennedy (R-Minnesot) then offered an amendment to reduce Amtrak funding, again by $320 million, and spread that money over 8 different programs. The Kennedy amendment was defeated 89-325. Reps. Quinn (R-New York) and Olver (D-Massachusetts) offered amendments that would have increased Amtrak's funding by $800 million and $500 million, respectively. Both amendments passed but were overturned by the chair on procedural calls put forth by Chairman Istook.

Rep. Jack Quinn (R-New York), Chairman of the House Subcommittee on Railroads and ardent Amtrak supporter, reacted harshly to the two failed Amtrak amendments to increase funding , commenting that “we have given Amtrak just enough money to fail.” Quinn added, “If the $900 million holds, I’ll predict disastrous consequences for passenger rail service as we know it.”

When the House reconvenes on Tuesday to consider the Transportation-Treasury spending bill, additional Amtrak amendments will likely be offered. Rep. John Mica (R-Florida), Chairman of the House Subcommittee on Aviation, plans to introduce an amendment which will force Amtrak to release more financial information. Mica, an Amtrak detractor, wants Amtrak to comply with the recently passed Sarbanes-Oxley Act, the accounting reform law passed after the Enron and Global Crossings scandals. Also, Rep. Pete Sessions (R-Texas), will offer an amendment that would strip funding for any Amtrak route that did not bring in at least 50 cents for every dollar that it cost the railroad to operate.

The Bush Administration released a statement on September 4th supporting the House Transportation-Treasury spending bill. However, the administration expressed dismay with appropriators for including more money for highway programs than the President had originally sought. In the White House budget, the administration asked Congress to fund highway programs at $29.3 billion, but the funding for highway programs in the House bill totals $33.4 billion. The White House exhorted appropriators that such spending on highway programs will exceed revenues derived from the highway trust fund.