The House Committee on Appropriations Subcommittee on Transportation & Treasury yesterday approved a spending plan for transportation programs that includes a reduction in spending for transit programs. Most elements of the trnasit program would receive increases under this plan. The major change is the 21% cut for the New Starts program.

New Starts earmarks were limited to projects with FFGA's in effect now and three (New York, Phoenix and Las Vegas) which are close to receiving FFGA's. The bill does not earmark the bus program, JARC or highway projects. It is expected those earmarks will appear in conference with the Senate later this year.

The committee approved measure would also cut Amtrak substantially while increasing highway spending.

Here is a chart comparing the House's proposed transit spending for fiscal 2005 with the fiscal 2004 levels.

Yesterday Congress adopted resolutions (H Con Res 467 and S Con Res 133) which label the crisis in western Sudan a genocide. The fighting has left at least 30,000 dead since 2003. The congressional measures also requested that other countries support the United States in stopping the genocide. Although the resolution is non-binding, lawmakers hope it will pressure the United Nations and the Bush administration to also declare the Arab militia’s violence towards black Africans in the Darfur region genocide. Due to the inaccessibility of the region during the upcoming rainy season, it is estimated that up to 350,000 more may die within the next couple of months. If the United Nations was to declare that the violence is in fact genocide, under the 1948 Geneva Convention participants would be required to intervene to stop it. A resolution addressing the crisis is being drafted by the U.N. Security Council, however, the Sudanese government has cautioned against military intervention. Although Sudan has been under U.S. economic sanctions since 1997, the United States has little leverage to influence the government. In an effort take a stand against the ethnic cleansing, three Democratic lawmakers – Charles B. Rangel of New York, Bobby L. Rush of Illinois and Joseph M. Hoeffel of Pennsylvania – protested outside the Sudanese embassy and were arrested for disturbing the peace.

As expected, a bilateral free-trade agreement with Morocco sailed through the House today, passing by a vote of 345-76. The measures (HR 4842 and S 2677) received unanimous approval from the House Ways and Means Committee and the Senate Finance Committee. Passage in the House Committee was virtually assured when the Moroccan government and the Bush administration made assurances on labor rights and pharmaceutical protections, in order to mollify some Democrats. Amendments were prohibited in committee and on the floor under fast-track procedures.

Coming in the wake of an agreement with Australia, the pact gives President Bush another victory to chalk up on the free-trade column.

The 567-page September 11 commission report released this morning criticized congressional oversight in the intelligence community and recommended restructuring committees to handle homeland security. Congress will be unlikely to consider any major changes this year due to limited time and committee chairmen reluctant to give up their authority. The final report, released after a 20-month investigation, calls for a new Cabinet-level intelligence chief with more budget and operational authority, an idea which has been debated but gone nowhere.

It also recommends that both houses create permanent homeland security committees with exclusive jurisdiction over domestic security. Currently, the House’s committee is a select panel due to expire at the end of this Congress while the Senate has no homeland security committee. This would be an improvement for Christopher Cox (R-California), the chairman of the House’s select committee, who hopes having principal authority over homeland security will eliminate the battles his panel has had since its inception 18 months ago preventing any of its major legislation from reaching the floor.

The commission recommends either creating a joint House-Senate intelligence committee or strengthening the intelligence committees in each chamber. One way to strengthen the committees is to give them authority over intelligence agency appropriations, which currently falls under the annual defense spending bill.

A controversial recommendation from the committee addresses abolishing term limits for the intelligence committee members. Those who support this recommendation argue that longer terms on the committee would allow members to gain crucial experience and institutional knowledge. Many oppose this recommendation, including House Minority Leader Nancy Pelosi (D-California), who believes turnover is good for the committee to avoid conflict and get new perspectives. In May the Senate added a provision to abolish the 8-year limit to the fiscal 2005 intelligence authorization (S 2386), which should go to the floor after Labor Day.

The House and Senate conferees on the TEA-21 reauthorization met today to hear a proposal from the House for the overall spending level. The House proposal, presented by Rep. Bill Thomas (R-California), Chairman of the House Ways and Means Committee, would provide $299 billion in contract authority and $284 billion in guaranteed spending. Rep. Thomas said the Speaker of the House would support a bill with this number and that the President would sign it.

Sen. Jim Inhofe (R-Oklahoma), the Conference Chairman said this proposal would be rejected by Senate conferees if there were a vote on it today. Nevertheless, he asked the staff to continue to work over the recess to see if it is a basis for moving forward. Sen. Jim Jeffords (I-Vermont), said that somewhere between the House offer and the Senate offer ($318 billion) a solution might emerge. Rep. Jim Oberstar (D-Minnesota) indicated he thought the offer represented progress and that he hoped that in September further progress could be made in boosting the number.

Rep. Thomas responded to these hopeful comments by saying an increase in the number he proposed should not be discussed, because nothing higher could be signed by the President.

The leaders of the conference directed staff to talk over the August recess about how progress might be made.

In the meantime, an extension through September 30 of the existing program has begun moving. Final action on the extension is expected before Congress departs for its five-week recess tomorrow.

We will have further thoughts and reaction to today's meeting soon.

Congressional renewal of some of President Bush’s expiring tax breaks hit a snag yesterday, as the White House insisted on a five-year extension. Republicans in the House and Senate had planned on enacting a two-year extension. The administration’s request has made it highly unlikely that any tax-cut extension will be passed before the August recess begins on Friday. Top Senate tax-writer Charles Grassely (R-Iowa) said the chances of a bill passing were about “10 percent.” A spokesman for House Speaker J. Dennis Hastert (R- Illinois) said that further work would have to wait until September. Republicans had intended to use a conference bill on the child tax credit extension (HR 1308) as their vehicle to prolong a wide-range of the president’s tax cutting measures.

Democrats charged that Republican’s failure to agree on the duration of a tax-cut extension was yet another example of GOP factions fighting amongst themselves. Some Republicans are calling for revenue offsets that would neutralize the impact of any measure on the deficit.

Yesterday the House passed a bill (HR 3574) to block the Financial Accounting Standards Board’s (FASB) rule that companies treat stock options as an expense from taking effect in December. The rule would lead many companies to report losses instead of profits, especially technology companies, who lobbied hard against the rule. Companies such as Cisco Systems Inc. feared they would have to stop offering stock options if the rules were enacted. An amendment to remove the language in the bill requiring companies to estimate the value of options at the current value of the stock failed.

Those who oppose the bill do not want to interfere with the FASB standards and insist that the rule is necessary to ensure the accuracy of financial statements in indicating a company’s condition. This legislation is opposed in the Senate by a bipartisan group of senators including Richard C. Shelby (R-Alaska), the chairman of the Banking Committee, making the vote in the House mainly symbolic.

Yesterday the Senate Veterans’ Affairs Committee approved a measure (S 2483) sponsored by committee Chairman Arlen Specter (R-Pennsylvania) to provide an annual cost-of-living increase in benefits for disabled veterans and survivors of deceased veterans. The House debated a similar bill (HR 4175) yesterday which is expected to easily pass today. The increase is tied to the Consumer Price Index, which is expected to increaes 1.7% this year. This increase applies to the benefits and payments received by more than 2.5 million veterans, 300,000 spouses, and 29,000 children of deceased veterans.

Three other bills sponsored by Specter were approved by the Senate panel, including a bill (S 2482) which would simplify payment rules for physicians working at VA facilities and control the work schedules and pay for registered nurses. A second bill (S 2486) would allow service personnel to increase their GI Bill education benefits. A manager’s amendment was added to this bill authorizing the VA to guarantee adjustable rate home mortgage loans and increase the amount of the loan. S 2485 would authorize leases and property transfers. A manager’s amendment added to this bill would require the VA to report annually on the waiting time for appointments and allow them to provide up to 2 weeks of treatment for the newborn of a female veteran. The panel also approved a measure allowing Medicare-eligible veterans to get cheaper prescription drugs from the VA.

Yesterday the House passed a bill (HR 3936) authorizing the move of the US Court of Appeals for Veterans Claims to a new Veterans Courthouse and Justice Center located on Pentagon land.

Conference Chairman James Inhofe (R-Oklahoma) introduced a compromise funding level at the TEA-21 House-Senate Conference meeting this morning. In it, Inhofe offered a motion that would provide $301 billion in contract authority and $289 billion in guaranteed spending over six years. As you will recall, the Senate’s SAFETEA bill calls for $318 billion in contract authority and the House-passed TEA-LU calls for $284 billion in contract authority. Inhofe stated that this funding level will guarantee a 94 percent rate of return to states on gas tax funds. Chairman Inhofe called for a vote on this compromise when the conference committee meets next at 11 am on July 22.

Inhofe’s proposal drew skeptical reaction from Rep. Don Young (R-Alaska), Chairman of the House Transportation and Infrastructure. While calling it a “discussable offer,” Young was concerned that the proposal gave the chairman too much power to reconcile Senate-House discrepancies. Senator Harry Reid (D-Nevada) said he was “very, very concerned” with the level of funding Inhofe had proposed. Reid described the funding for transit as make or break for many Democratic senators. Other conferees tried to put a positive spin on their comments, but it was clear that finalizing the financing issue by Thursday’s meeting will be difficult.

There were no discussions on the length of the required program extension which expires at the end of July. Congress must pass an extension before they recess for the month at the end of this week.

We will post updates when new information becomes available.

The homeland security authorization bill stalled last night, raising doubts about whether it will see action before Congress’ upcoming six week recess. The bill, sponsored by Christopher Cox (R-California), would strengthen the Department of Homeland Security intelligence and management functions. The recent impasse was caused by the absence of several Republican chairmen at the House Select Homeland Security Committee markup and disagreement among committee members on how to handle the more than 70 Democratic amendments. Cox split his bill into nine separate pieces of legislation to allow bits and pieces of it to progress through Congress and to marginalize the Democratic amendments. House parliamentary experts were called in for consultation last night in a closed meeting due to the lack of agreement over the relevance of amendments. After several hours of negotiations behind closed doors, committee members reached agreement on some amendments. Although several GOP chairmen on this panel have publicly said they see no need for a separate Homeland Security Committee, Cox would like to establish his select committee as a permanent panel in the next Congress.

Conferees are scheduled to meet on Tuesday in yet another attempt to reach an agreement on the overall funding level for TEA-21 reauthorization. This meeting comes in the wake of last week’s developments, when two scheduled meetings were canceled and rumors about a House deal with the Administration abounded. If an agreement is not reached this week, chances for reauthorization would have to be put on hold until September, when lawmakers return from the August recess. By that time however, election year activity may constrain further progress. If a funding agreement is reached by the end of this week, the process could leap forward during the August recess. If an agreement is reached, the summer break would allow many program and funding issues to be negotiated on the staff level, speeding up the process significantly. We will bring you updates on tomorrow’s conference when we have any further information (provided the conferees buck the current trend and do, in fact, meet as scheduled).

On July 21 the Senate Governmental Affairs Committee will mark up a bill that would continue to make students from the District of Columbia eligible for federal grants to help pay for out-of-state colleges and universities. The bill (S 2347) would permanently extend the District of Columbia Tuition Assistance Grant program (PL 106-98), which has allowed District students to pay the equivalent of in-state tuition by paying the difference, up to $10,000 per year, since 1999. The program also provides up to $2,500 for students to attend private schools in the Washington area and historically black colleges nationwide. Senators George V. Voinovich (R-Illinois) and Susan Collins (R-Maine) hope to bring the measure in line with the House bill (HR 4012) by reducing the reauthorization to five years. The House’s draft fiscal 2005 spending bill for the District increases the spending for tuition grants by 52%, bringing the amount to $25.6 million.

House appropriators will propose cutting the budgets of most programs covered by the sprawling VA-HUD spending bill, in part to provide more money in FY 2005 for veterans’ health care.

The cuts will enable appropriators to direct more money to veterans and address the needs of an increasingly influential and much courted group of voters. However, this will mean that many agencies and programs, including NASA, EPA and the National Corporation for National and Community Service will have to make do with allocations smaller than their FY 2004 spending budgets.

The Senate will not begin debating its version of the VA-HUD spending bill until after the August recess.

The House VA-HUD appropriators complain that they have not been allocated enough money. They have $92.9 billion to divide among the departments and agencies covered by the bill, or about 2.3 percent more than fiscal year 2004 spending. The VA-HUD bill is certain to be among the most controversial of the 13 fiscal 2005 appropriations bill. It is likely to be bundled into an omnibus package to ease its passage.

Veterans’ health programs already receive the largest allocation in the VA-HUD bill. Republicans recognize that they must compete with election year promises Democrats have made to veterans. The Democrats, for example, have proposed designating veterans’ health care a mandatory, rather than discretionary, expenditure so it will not be subject to the annual competition for a limited pot of discretionary budget authority.

Some members of the House VA-HUD Subcommittee said they are willing to cut spending across the board for most programs in order to commit more money to veterans’ health care.

The other program slated for an increase in the draft spending bill is HUD’s rent voucher program, Section 8. President Bush had proposed cutting the program by $1.1 billion from its FY 2004 appropriation. This proposed cut was part of a proposal to convert the federal program to a block grant to states. However, because lawmakers have not authorized such a conversion, appropriators will not agree to the spending cut.

The EPA’s budget may face a cut of up to 7 percent, mostly by cutting grants to states and Indian tribes for pollution control projects.