Senate Budget Chairman Judd Gregg (R-New Hampshire) and House Budget Chairman Jim Nussle (R-Iowa) have been in informal talks this week to bridge the gap between the House and Senate version of the FY2006 budget resolution. Gregg is under pressure from House conservatives to produce far larger cuts than the Senate included in its budget resolution. Gregg has indicated to Nussle that the Senate will consider cuts of up to $43 billion over five years which is the halfway mark between the House and Senate budget resolutions. However, Gregg is not guaranteed support at this number and it is bound to anger House conservatives who would rather see a number closer to the mandatory cuts in the House resolution of $69 billion.

Cuts to Medicaid continue to remain a big issue. During debate on the budget resolution, the Senate adopted an amendment offered by Senator Gordon Smith (R-Oregon) to strip instructions to the Finance Committee to produce $15 billion in budget cuts (the bulk of which was to come from Medicaid). More recently, 43 House GOP members signed a letter circulated by Congresswoman Heather Wilson (R-New Mexico) protesting up to $20 billion in Medicaid cuts.

House conferees for the conference committee will remain unnamed as the informal discussions between Gregg and Nussle continue.

Next week the House will consider a comprehensive energy bill while the Senate will continues to debate the fiscal 2005 supplemental spending bill (HR 1268), which has stalled over immigration-related amendments. Following passage of the supplemental, the Senate could consider bills related to welfare, child custody, and the conference report on the fiscal 2006 budget resolution, if an agreement is reached.

The Water Resources Development Act of 2005 passed on a voice vote in the Senate Environment and Public Works Committee yesterday. The bill would authorize more than $7 billion in Army Corps of Engineers projects. Several senators withdrew amendments so that the bill could make it to the Senate floor as soon as possible, keeping debate about corps reform, one of the sticking points of the bill in past years, to a minimum. What little discussion there was about corps reform centered on an amendment offered by Senate EPW Committee ranking member Jim Jeffords (I-Vermont) and Sen. Max Baucus (D-Montana) that was included in last year’s version of WRDA. The amendment would have established an independent peer review process within the Office of the Inspector General of the Army and was voted down by voice vote.

The shipping and construction industries have shown support for this year’s version, saying the bill would help boost the economy. However, environmentalists have taken issue with corps reform language, saying it is superficial -- allowing review of project costs and benefits by the corps, rather than requiring an independent investigation. Some experts have said that passage of a WRDA bill this year is again unlikely because of overall spending cuts. (WRDA is supposed to be renewed every two years but has not been reauthorized since 2000.)

Also in the EPW’s committee meeting yesterday, EPA nominee, Stephen Johnson was cleared with a 17-1 vote. Senator Tom Carper (D-Delaware) was the lone dissenter and he is expected today to block a Senate floor vote on Johnson until the Bush administration meets his various demands for analysis of air pollution legislation. Carper, the lead Democratic negotiator in last month's talks over rewriting the Clean Air Act, wants EPA to assess the economic and health benefits of three competing legislative proposals for power plants, but the agency has refused. A 24-year EPA veteran, Johnson over the last two weeks has told Carper that EPA is willing to generate the requested data so long as there is consensus among other key lawmakers as to the parameters of the work. While the original plan was to bring the nomination to the full Senate as early as next week, Carper's plans to hold up the nomination would effectively spike that plan. The only way Johnson's nomination could move if Carper raises objections, outside of EPA satisfying the information request, would be for GOP leaders to force a cloture vote requiring 60 supporters.

Rep. Heather Wilson (R-New Mexico) and 43 of her Republican colleagues have sent a letter to Budget Committee Chairman Rep. Jim Nussle (R-Iowa) to protect Medicaid funding in conference negotiations on the fiscal 2006 budget resolution.

With House Democrats united in opposition to Medicaid cuts, Rep. Wilson’s coalition could provide the majority needed to adopt a nonbinding motion to instruct House conferees to drop a budget provision that would likely result in Medicaid cuts. That would put both the House and Senate on record against Medicaid cuts, which Republican budget writers consider essential to their effort to rein in mandatory spending.

The House version of the budget resolution (H Con Res 95) directs the Energy and Commerce Committee to find $20 billion in savings over five years, most of which would come from Medicaid. The Senate voted to strike a similar $15 billion instruction to the Senate Finance Committee before adopting its version of the budget (S Con Res 18) last month. No amendment targeting the proposed Medicaid cuts was permitted in the House.

In the Senate, Sen. Gordon Smith (R-Oregon), who sponsored the amendment stripping the instructions to the Finance Committee, is negotiating with Majority Leader Bill Frist (R-Tennessee) on Medicaid savings. Sen. Smith has said he wants savings from Medicaid to be limited, but that he wants to support the final version of the budget resolution.

Sen. Norm Coleman (R-Minnesota) has recommended that Medicaid cuts be included in the budget blueprint but delayed until the later years of the resolution’s five year time frame. Arguing, that would allow time for study by a Medicaid commission that Smith’s amendment called for and Rep. Wilson’s group has endorsed.

Medicaid is one of a number of mandatory spending programs from which Republican leaders hope to extract some savings. There are also wide gaps between the House and Senate on agriculture programs.

Yesterday, House Homeland Security Committee Chairman Christopher Cox (R-California) introduced a bill (H.R. 1544) to provide funding for state and local first responders. The Grant Reform and the Faster and Smarter Funding for First Responders Act of 2005 would guarantee each state 0.25 percent of the first-responder grant, and distribute the remainder based on risk and threat. States with an international border or international port would receive at least 0.45 percent. The Homeland Security Committee will hold a hearing on the bill tomorrow. The current state minimum for formula grants is 0.75 percent.

Changes to the formula stalled last year because of disagreement with the Senate between high density urban areas and less-populated states. Yesterday, the House Homeland Security Subcommittee on Emergency Preparedness, Science, and Technology held a hearing focusing on homeland security in rural states. State homeland security directors from Missouri, Iowa, and North Carolina testified that a risk/threat based formula for distributing homeland security funding could work only if it considers agricultural and other concerns, and focuses not only on the high density urban areas.

Chairman Cox is also trying to keep his bill from being referred to additional committees since multiple committees have jurisdiction over homeland security funds. Four House chairmen who could ask for referrals have already signed off on the legislation. The text of Cox’s bill can be found here in pdf format.

Over in the Senate, the Senate Homeland Security and Government Affairs Committee is marking up its first-responder funding bill (S. 21) today. S. 21 provides each state with a minimum of 0.55 percent of the first-responder funding pool.

While the Senate originally planned to not take action on the energy bill until the summer months, it appears plans have changed. The Energy and Natural Resources Committee will go to markup in May, and the Finance Committee will have its tax package ready by the time the energy bill gets to the floor. Energy and Natural Resources Committee Chairman Pete Domenici (R-New Mexico) indicated that since the House Ways and Means Committee will be moving faster on the tax portion of the bill than originally thought, the Senate feels comfortable quickening its pace. Ways and Means will be marking up a proposed $7.6 billion package today. This is slightly higher than the White House proposal of $6.7 billion over 10 years which both chambers believe is not high enough.

The markup of the bill in the House Energy and Commerce Committee continues today after a seven-hour markup session yesterday when the committee completed work on three titles of the bill -- with 13 titles to go.

The House Resources Committee will also begin marking up energy bill sections under its jurisdiction today, including several energy incentives and other provisions not in last year's comprehensive package. Committee Chairman Richard Pombo (R-California) will advance several provisions that were not in last session's bill. They include a provision placing new limits on National Environmental Policy Act review of renewable energy projects on federal lands and a "set America free" section that establishes a commission to craft a policy that would seek to ensure North American energy independence by 2025.

Wednesday’s markup of the Water Resources Development Act (WRDA) in the Senate Environment and Public Works Committee is one of several important markups that will occur this week. Funding for Army Corps projects is subject to authorization under WRDA, which Congress intended to renew every two years but has not been reauthorized since 2000. A large stumbling block has been disagreement over how to reform corps operations. Last year, the Senate was able to get WRDA out of the EPW Committee only to see it stall on the Senate floor. Environmentalists have already said that the corps reform language in this year’s version of WRDA is superficial -- allowing review of project costs and benefits by the corps, rather than requiring an independent investigation. House Water Resources and Environment Subcommittee Chairman John Duncan (R-Tennessee) is said to be working on a House version of WRDA which will probably look much like the bill passed by the House in 2003. That version requires an independent peer review of most corps projects costing more than $50 million.

Also on Wednesday, the EPW Committee will hold a confirmation vote on Stephen Johnson to head the EPA. (He has been acting chief since January.) Johnson’s confirmation remains questionable despite his decision to cancel a controversial plan for monitoring pesticide use in the homes of 60 Florida children. Senate EPW Committee ranking member Jim Jeffords (I-Vermont.) and EPW Clean Air Subcommittee ranking member Tom Carper (D-Delaware) have a number of long-standing information requests at EPA concerning legislation to rewrite the Clean Air Act for power plants, climate change and the Bush administration's regulatory overhaul to the New Source Review routine maintenance provisions for industry.

Other important markups this week include Wednesday’s markup of legislation regarding funding for homeland security programs in the Senate Homeland Security and Government Affairs Committee. On April 14, the Senate Commerce, Science and Transportation Committee will markup the transportation reauthorization bill. The Senate Commerce Committee is one of multiple Senate committees that has jurisdiction over the transportation reauthorization bill. It is still unclear as to when that bill will come to the Senate floor.

The House Appropriations Committee has developed yet another form for those seeking funding from a State and Tribal Assistance Grant (STAG). This form must be submitted by the sponsoring Member of Congress by April 29. The numerous requests for water infrastructure improvements undoubtedly led to this additional form (in Microsoft Word format) to help the committee determine the eligibility of the requests.

The Transportation Security Administration (TSA)'s director, David Stone, has been asked by President Bush to step down in June. This is the third top ranking official to leave the three year old agency. The agency was created following the September 11, 2001 terrorist attacks and was once the primary agency in the nation's effort to protect air travelers.

It is widely speculated that TSA is being slated for dismantling and may find itself a victim of a reorganization within the Department of Homeland Security. Based on provisions within the President's proposed 2006 budget, TSA will likely become a manager of airport security screeners.

The period between the House spring break and Memorial Day is the chamber's longest work period of the year and yesterday GOP leaders laid out the schedule for the next seven weeks. Next week will focus on the bankruptcy reform bill that was supposed to be on the floor this week but was postponed due to the Pope's death. Permanent repeal of the estate tax will also be on the agenda for the week of April 11.

Other legislation expected to be on the House floor by May 26, when the House breaks for the one-week Memorial Day recess, includes a comprehensive energy bill, tort reform bills, a five-year welfare reauthorization (H.R. 240), and a conference report on the fiscal year 2006 budget resolution (H.Con.Res.95). Yesterday, the House Energy and Commerce Committee starting marking up an energy bill by considering numerous amendments to the bill. However, the committee did not finish its work and the markup will continue next week to address the legislation's main provisions. If the other committees of jurisdiction can also complete their work next week, the energy bill might be on the floor the week of April 18.

During the press conference when GOP leaders laid out their plan, House Majority Whip Roy Blunt (R-Missouri) told reporters that he is working "hard" with the Senate to move along the transportation reauthorization bill but no specific plans were mentioned.

While President Bush and the House Homeland Security Committee Chairman Christopher Cox (R-California) want to distribute homeland security grants to state and local government based on terror threats, Sen. Susan Collins (R-Maine) would prefer that the money be distributed via a formula that would not leave out less populous states. Collins has introduced first-responder legislation (S. 21) that reflects her views. However, she plans to slightly tweak the legislation to find a compromise with the White House. The new version of her bill would lower the baseline amount of funding that each state receives in formula-based anti-terror grants for its police, firefighters and other first responders. The remaining money would be distributed by the Homeland Security Department based on terror threats. The markup on the bill in the Senate Homeland Security and Governmental Affairs Committee has been rescheduled until next week because Senator Collins will be out of the country attending the Pope’s funeral.

Chairman Cox will hold a hearing on his legislation on April 14. This will be the second attempt for Congress to try to find a compromise on the funding formula. Since no agreement could be reached last year during consideration of the intelligence overhaul law last year, a formula change was left out of the legislation.

Both the Senate Health, Education, Labor, and Pensions Subcommittee on Education and Early Childhood Development and the House Education and the Workforce Committee held hearings yesterday on the Head Start program and a recent Government Accountability Office report on grant competition within the program. At each hearing, the issue was raised about the administration's proposed state pilot project, which would allow several states to take over local Head Start centers. Senator Lamar Alexander (R-Tennessee) expressed concern at the Senate subcommittee hearing about whether the proposal would improve academic achievement for children enrolled in Head Start. At the House committee hearing, Chairman John A. Boehner (R-Ohio) suggested that a new approach may be taken that looks at alternatives to contentious issues within the pilot project, including the issue of coordination of state programs.

Many local intergovernmental organizations have come out in support of the Head Start program requesting no major alterations to the program.

The House is scheduled to markup comprehensive energy bill legislation this afternoon. The legislation is similar to President Bush’s attempt to pass a comprehensive bill during his first term. The bill retains a liability waiver for manufacturers of the fuel additive MTBE which was one of the main sticking points that prevented the bill from passing in past years so it will be interesting to see how the issue plays out this time around.

However, new additions to the bill focus on giving federal regulators greater authority to approve construction of terminals for imported liquefied national gas. The draft bill would also create “refinery revitalization zones” to encourage construction of refineries in manufacturing areas with high levels of unemployment. In addition, it would allow the EPA administrator to waive clean fuel rules during “extreme” fuel supply emergencies. The clean fuel language could prevent states from forcing refiners to produce cleaner, blended fuels for use in those states. Refiners produce dozens of “reformulated” gasolines to comply with the regional and state clean air requirements and language in the bill calls on the EPA and the Energy Department to study changes to existing clean fuel rules with the idea of creating a more uniform nationwide fuel system.

The Senate is not expected to address energy until the summer.

Congress returned yesterday from its Spring Recess and Senate leadership immediately issued a schedule pushing floor consideration of the TEA-21 reauthorization back until the second week of May. While it was a foregone conclusion to many that a House-Senate Conference could not finish its work in time for the May 31 expiration date of TEA-21 program, this new schedule would appear to make it official.

The Senate schedule for this week has been truncated by the need for a congressional delegation to attend the funeral of Pope John Paul II. The only agenda item for the week is the State Department Authorization bill. For the week of April 11, the Senate is planning to finish up the State Department bill if needed and then turn to the supplemental appropriations for the military efforts in Afghanistan and Iraq. The week of the 18th is expected to be needed to finish the supplemental appropriation. The last week in April is now slated for the TANF (welfare) Reauthorization. Since the Senate is taking a week of the first week of May, the earliest the TEA-21 measure can reach the floor under this schedule would be the week beginning May 9.

House-Senate conferences on surface transportation bills have historically taken about 6 weeks from the date of Senate passage to reach completion. If that schedule hold, the bill would not be done until late June.

While the delay is definitely not good news, there is continued optimism amongst most people we talk to on the Senate side that there will be a strong effort to add funding to the $284 billion measure now awaiting floor action. A funding level around $300 billion is within the realm of possibility.

We will keep you posted on developments as they occur.

The Senate appointed its conferees to negotiate with the House on the 2006 congressional budget resolution. Republicans: Senators Judd Gregg, Chairman (New Hampshire), Wayne Allard (Colorado), Pete Domenici ( New Mexico), and Charles Grassley (Iowa). Democrats: Senators Kent Conrad, Ranking Chairman (North Dakota), Patty Murray (Washington) and Paul Sarbanes (Maryland).

The House has not yet selected its conferees. It is most likely that a conference session will not occur until the week of April 11. The legal deadline for producing a budget is April 15, but no one expects talks to be wrapped up by then.

Last year demands by Senate moderates for pay-as-you-go budget enforcement rules derailed Republican efforts to pass a budget resolution. This time around it is a substantial difference between the House and Senate over Medicaid spending, energy policy and cuts to a tax credit for the working poor that are expected to make for tough negotiations.

The budget plan in the House requires committees to produce $68.6 billion in savings from mandatory spending programs including Medicaid. On the Senate side, Sen. Gregg moved a less ambitious plan with $32 billion in mandatory savings through the Senate Budget Committee. However, the Senate voted 52-48 to strip $15 billion in spending cuts, primarily those aimed at Medicaid which left just $17 billion in mandatory cuts in the Senate.

The difference between the House and Senate over cuts in mandatory spending has raised concerns that Republicans might fail to produce a budget resolution for the second year in a row. The pressure remains to produce a reconciliation bill less ambitious than the $68.6 billion measure envisioned by the House version of the budget.

The Senate returns to work today after a two-week spring recess. President Bush’s $81.9 billion supplemental spending request for continuing operations in Iraq and Afghanistan will be the topic of debate in the Senate Appropriations Committee. Meanwhile, the House returns tomorrow and is expected to clear a bill (already passed by the Senate) to overhaul bankruptcy law this week. Behind the scenes, negotiators will work to resolve the differences between the House’s budget resolution and the Senate version. Republicans have deep divisions within their own party between those worried about cuts to popular programs, those who want additional tax cuts and those focused on the rising deficit. The House version calls for $68.6 billion in cuts to mandatory programs over five years, while the Senate version has only $17 billion in mandatory cuts after senators restored $15 billion in proposed cuts expected to come out of Medicaid via passage of a floor amendment. Conferees must calculate how many billions in Medicaid cuts, if any, Republican senators who voted to strike the cuts will be willing to accept and still vote for a conference report. In addition, many moderates will be wary of a final conference report that has more $70 billion in tax cuts.

At this point it is unclear how the death of Pope John Paul II will affect this week’s Congressional schedule.