On Thursday, the House Select Committee on Homeland Security will approve a bill (H.R. 3266) that will alter the way first-responder funds are distributed to communities. The measure, sponsored by Committee Chairman Christopher Cox (R-California), would change grant formulas so that money bequeathed is done so based solely on terrorism threats faced by communities.

The new allocation formula would provide larger cities like New York and Los Angeles with more first-responder money, while smaller communities and rural towns would see less. The current allocation formula is primarily based on population, with each state receiving a minimum guaranteed funding level. To determine threat levels that various communities face, Homeland Security officials would analyze the vulnerability of critical infrastructure and juxtapose such data with intelligence on terrorism threats.

Another provision in the bill would mandate that the Homeland Security Department set minimum standards for emergency preparedness that states and cities would have to comply with before receiving anti-terrorism money. Also, the measure would change the rules for the nation’s color-coded terrorist alert system so that future warnings are more specific in terms of which region or sector of the economy faces the threat.

First-responder money is expected to total $2.7 billion in FY 2005.

Cox’s legislation will not affect the police and firefighter grants that were around before September 11, 2001.

House Transportation and Infrastructure Chairman Don Young (R-Alaska) has accepted a $275 billion, six year transportation reauthorization package, according to CQ Today. That figure is lower than the $279.5 billion number reached two weeks by House leaders and far below the $375 billion Young originally sought. The White House had threatened to veto any figure above $275 billion, and members have been less then enthusiastic about pushing a one year reauthorization at current levels, because new projects could not be started unless a full package was passed.

A plan to create the most extensive toll lane network in Virginia was proposed yesterday by engineering firm Fluor Virginia. The plan would allow single and double passenger vehicles to purchase their way out of traffic and into "high-occupancy toll" (HOT) lanes. Service would run from the 14th Street Bridge to south of the Rappahannock River, with HOT lanes being dedicated to high occupancy vehicles, toll paying customers, and a bus rapid transit system.

A full look at the history of HOT lanes can be found in this December piece in the Washington Post.

On Friday, Senator Ernest Fritz Hollings (D-South Carolina) introduced a bill (S 2216) authorizing $515 million for rail security, in the wake of last Thursday's train-bombing in Madrid. The terrorist act has refocused lawmakers looking at the safety of the railway system in the United States, including metropolitan commuter systems. The Hollings measure has been introduced twice before, but failed to move. It contains several measures aimed at improving current screening measures for passenger rail, which currently don't exist.

House Ways and Means Chairman Bill Thomas (R-California), according to CQ, has decided to abandon his effort to ban leasing arrangements used by municipalities to provide tax breaks to investors in return for infrastructure and transit improvements. Opponents of the ban argued that any revenues generated from the measure should be redirected back into spending on infrastrucutre, and House Democrats promised to offer a slew of amendments to do just that should the measure reach the floor. An aide to Thomas indicated he would only mark up $15 billion worth of highway provisions, including a proposal to change an low excise tax on ethanol into a tax credit.

Congress is facing increased pressure on two fronts to reconsider the recently passed Medicare prescription drug law. First, because of rising drug costs, lawmakers are being asked to take a second look at allowing the importation of drugs from other countries into the United States. Secondly, lawmakers are demanding answers from the administration over reports that the administration purposefully withheld the true costs of the prescription drug benefit to Medicare.

Senate Finance Chairman Charles Grassley (R- Iowa) and Senator Edward Kennedy (D-Massachusetts) have said they will introduce legislation that would allow consumers to import U.S. approved prescription drugs from other countries. Still undecided is whether to allow imports from Canada only. This measure is expected to be introduced within the next several weeks.

Senate Majority Leader Frist (R-Tennessee) has also said that the Senate would begin a process for developing proposals to permit the safe importation of drugs if they were approved by the Food and Drug Administration.

Importing drugs from countries where they are often sold for less than in the United States was among the most contentious issues Congress debated during the drafting of last year’s Medicare drug law.

Governors across the United States also are saying that buying cheaper drugs from other countries is the only way states can afford to provide prescription drug coverage to state employees.

Under current law, importing drugs is legal only if the HHS secretary certifies that the drugs being imported are safe. Last year, the House passed legislation that would permit importation of FDA-approved drugs from FDA-approved plants in 25 industrialized countries. The Senate did not act on its version of the bill.

Democratic lawmakers are also upset over a recent revelation that an administration actuary’s job was threatened if he revealed the estimates of the costs of adding a prescription drug benefit to Medicare. Last week Minority Leader Tom Daschle (D-South Dakota) and Ted Kennedy sent a letter to President Bush asking what information he had about the costs of the bill before Congress voted. In addition, five House Democrats sent a letter to the HHS inspector general requesting an investigation into the claims.

The cost of the Medicare bill – estimated originally by the Congressional Budget Office at $400 billion over 10 years when it passed - sparked an outcry from Democrats and conservative Republicans when the administration released new estimates that the overhaul would cost $139 billion more than congressional estimates.

The Corporate Tax Bill (HR 2896), which has stalled in the House, will receive $36 billion in new provisions when it is marked up on March 17 or 18. Chairman of the House Ways and Means Commitee Bill Thomas (R-California), has proposed removing tax benefits for the ethanol industry as well as benefits to insitutions who lease infrastructure from municipalities for the purpose of deducting for depreciation on tax returns. The ethanol change would convert an existing reduced gasoline excise tax to an equivalent income tax benefit, which would generate $9 billion during the years from 2007-2010. (The current tax break expires in 2007.) Cancelling the current municipal leasing arrangement could raise $16 billion in revenue, which many Democrats wish to invest back into state and local infrastructure projects.

Both tax measures, if approved, are likely to help HR 2896 cut at least $60 billion in costs. The measure will also resolve a current dispute between the European Union and the United States, currently resulting in a 5 percent duty imposed on U.S. products.

The Senate takes up its version of the bill (S 1637) on March 22.

The Senate narrowly approved a budget resolution early this morning, by a vote of 51-45. Most Democratic amendments seeking to boost spending for domestic programs and homeland security were defeated. The resolution limits Fiscal Year 2005 discretionary spending to $821 billion, with procedural protection for a five year, $80.6 billion tax cut. It also contains pay-as-you-go (PAYGO) rules to keep revenues and spending in line, which are being currently debated in the House. House deficit hawks have stalled their FY05 resolution in an attempt to insert PAYGO into their version of the bill.

We are receiving reports today that House Speaker Dennis Hastert (R-Illinois) met with the President on March 10 and informed him that the House would consider in the near future a $275 billion/ six-year reauthorization of TEA-21. According to our reports, the Speaker received no commitment from the President either way as to the administration's position on that number. He did indicate that the President said he would look forward to working with a House-Senate conference on the bill.

This new spending total is $100 billion below the amount supported by the bipartisan leadership of the House T&I Committee. Committee staff is now beginning the process of determining whether or how to accommodate this number within the structure of the program proposed in the TEA-LU legislation proposed by committee leaders. This will be a very difficult process.

These developments make clear two parts of an otherwise murky picture: First, the House leadership is clearly in control of the process in the House -- overriding the position of committee leadership. Second, the White House is gaining in its effort to drive the spending level down towards its proposed level of $ 256 billion.

We will keep you posted on developments.

As the Senate continues its consideration of the FY 2005 Budget Resolution, one thing has become clear: House and Senate Republicans do not have ambitious plans for reconciliation legislation this year. The FY04 budget resolution currently in place already sets an $814 billion cap on appropriations. Taken together, this means that adopting a congressional budget is less important than in previous years, when they were crucial to enacting President Bush’s tax cuts.

However, adopting a budget resolution is a priority for Republican leaders if only to demonstrate that they can fulfill one of the most basic responsibilities of running Congress.

The $814 billion in discretionary appropriations in 2005 is slightly below the $818 billion Bush request. Sen. Nickles (R-Oklahoma), Chairman of the Senate Budget Committee is caught in a procedural bind that threatens to complicate floor proceedings. The FY 2004 budget resolution adopted in 2003 included a two-year set of spending caps that would limit discretionary spending in 2005 at $814 billion. As a result, the budget plan for the coming year must adhere to that level or risk being struck down on a budget point of order that would require 60 votes to waive. To live within the $814 billion cap, Nickels would cut Bush’s $421 billion request for defense by $7 billion, or about 2 percent.

However, Appropriations Chairman Ted Stevens (R-Alaska) and Armed Services Chairman John Warner (R-Virginia), vow to restore the defense cut, and there is considerable pressure to add back about $2 billion cut from the Bush request for domestic programs.

In the House, Budget Chairman Jim Nussle (R-Iowa) is putting together his fourth budget. Last year, Nussle pushed a proposal to trim 1 percent from most entitlement programs, including Medicare. The idea was significantly scaled back before it arrived on the House floor, and all of the remaining cuts in mandatory programs were dropped in conference talks with the Senate.

This year, Chairman Nussle said he will propose a one-year moratorium on earmarks, a response to concerns among conservative lawmakers and Republican core voters that Republicans are too prone to stuffing appropriations bill with pork barrel projects. Nussle’s plan, which is still being drafted, also would freeze or cut the budgets of every program that has not been reauthorized by its oversight committee, as well as block any new proposals to increase entitlement spending.

Nussle is also planning to decrease Bush’s defense spending request by 0.5 percent, or about $2 billion. Thirty-four Republicans have stated in a letter last month that they would vote against any budget resolution that cuts the president’s budget request for national defense.

Even with TEA-21 reauthorization still on the House Transportation and Infrastructure Committee’s docket, many lawmakers are still optimistic about a long-term bill being passed this year.

Committee Member Rep. Robin Hayes (R-North Carolina) commented, "I've got a good feeling about" a bill passing this year, according to BNA news service. Hayes was hesitant to predict whether the House would pass a two-year or six-year bill and is unsure what the price tag of the chamber’s bill will be.

Rep. Tom Petri (R-Wisconsin), chairman of the Subcommittee on Highways, Transit and Pipelines, feels that transportation stakeholders might be better off with a two-year reauthorization bill if an enacted six-year bill contains inadequate funding. Petri does not want states locked into a poorly funded six-year bill, though most Senators are staunchly opposed to a two-year bill because such a bill would not allow state DOTs to properly plan for future transportation projects.

Subcommittee ranking member, Rep. William Lipinski (D-Illinois), also remains confident that a long-term bill will be passed this year, commenting that the GOP leadership “has been very supportive ... right from the start.”

Currently, both chambers of Congress are working on passing a budget resolution, a non-binding measure that will provide a spending blueprint for lawmakers during the appropriations process. Transportation authorizers are looking to the House budget resolution to see how much money is allocated for transportation programs. The Senate budget resolution, which is currently being considered on the Senate floor, contains $256 billion for highway and transit programs over the next six years, which is the exact figure recommended in the President’s proposed budget. However, just last month, the Senate passed a long-term TEA-21 reauthorization bill that would fund surface transportation programs at $318 billion over the next six years. Budget Committee Chairman Don Nickles (R-Oklahoma) included only $256 billion for highway and transit programs because the committee assumed that the President’s number would ultimately be enacted into law, as opposed to the number contained in the Senate bill.

In the House, the Budget Committee will markup the chamber's budget resolution on March 11. Transportation stakeholders are looking to the House Budget Committee to see how much funding House GOP leaders are allotting for a TEA-21 reauthorization bill. With transportation authorizers in the House still yet to even markup a reauthorization bill, the House spending blueprint may provide House T&I Committee Chairman Don Young (R-Alaska) will an idea of how much support there is for a larger bill. The House T&I Committee has yet to even schedule a date for marking up their reauthorization bill, after numerous postponements.

The House Ways and Means Committee, which is charged with the task of approving a revenue title for the reauthorization bill, will markup a bill next week that would repeal the U.S. export tax regime and introduce a series of revenue raisers relating to leasing transactions and highway trust fund taxes. The Ways and Means Committee must act soon on this measure because the European Union is currently imposing tariffs on U.S. manufacturing goods because of U.S. export subsidies that were ruled illegal by the WTO. In the bill, Committee Chairman Bill Thomas (R-California) has attached $15 billion in fuel-tax-related provisions, including a modified version of the volumetric ethanol excise tax changes (VEETC) that were contained in the compromise energy bill (H.R. 6) that has stalled in Congress. The VEETC provision accounts for $9 billion of the $15 billion, causing many transportation stakeholders to ponder which other tax loopholes could be closed to finance increases in highway and transit programs.

Yesterday Russ Feingold's (D-Wisconsin) amendment to restore PAYGO rules passed the Senate by a margin of 51-48, with four GOP moderates joining Senate Democrats. The rules would require the cost of tax cuts and spending increases to be balanced by increases in revenue and cuts in spending. Although such a move would create a 60-vote hurdle for Senate Republicans to pass any further tax cuts, even Feingold has pledged to waive the requirements for three popular tax cuts set to expire this year: the child tax credit increase, the current 10% tax bracket and current "marriage penalty" tax relief.

In other budget news, by a 95-4 vote, Senators elected to adopt an amendment offered by John Warner (R-Virginia) to restore $6.9 billion worth of funds to the Pentagon, matching the administration's request.

Finally, Senator Max Baucus (D-Montana) was able to remove from the budget resolution a measure requiring the Finance Committee to lower mandatory spending by $3.4 billion over the next five years. Such a measure would cut Medicaid spending by $11 billion and lower the earned income tax credit for the working poor by $3 billion.

Pennsylvania's Senate passed a measure early this morning to amend the commonwealth's constitution to place a liability cap on medical malpractice claims. The House had passed a far more broad measure to impose liability restrictions on all civil suits, but reconciling the two different versions could prove difficult. In addition, in order to amend the Pennsylvanis Constitution, a bill must pass both the House and Senate in two consecutive years, to be followed by a vote by the people. Even then, an amendment would not contain specific dollar amount limits, which would have to be set by another bill after the constitutional process was completed.

On March 9, the Senate Finance Committee approved the nomination of Dr. Mark McClellan to serve as administrator of the Center for Medicare and Medicaid Services. The position become vacant after the former administrator, Thomas Scully left the agency for a job in the private sector. McClellan currently heads up the Food and Drug Administration and is the brother of Bush Press Secretary, Scott McClellan. In addition to being a medical doctor, Mark McClellan is also an economist.

The Finance Committee approved the nomination by a margin of 18-2. Senators Bob Graham (D-Florida) and John Kerry (D-Massachusetts) both voted against the nomination. Graham felt that McClellan had failed to adequately answer questions regarding his position on drug reimportation. Also, after the hearing, Senator Byron Dorgan (D-North Dakota) placed McClellan’s nomination on hold, meaning the Senate will not be able to vote on the nomination until Dorgan relents. Dorgan has already notified Senate Majority Leader Bill Frist (R-Tennessee) that he will object to a vote if McClellan’s nomination is brought to the floor. Dorgan is upset that McClellan will not testify before the Senate Commerce, Science and Transportation Committee before he is confirmed by the full Senate. McClellan has agreed to appear before the full committee once he is approved by the Senate.

Dorgan, along, with Commerce Committee Chairman John McCain (R-Arizona), have been vociferous about their desire to allow seniors to purchase drugs from other countries, where prices may be cheaper. While Dorgan has indicated he will not budge unless McClellan appears before the Commerce Committee, Frist has stepped in to attempt to address his concerns, while still having a full Senate vote this week.

As FDA Administrator, McClellan opposed the practice of reimportation because of safety concerns. However, at the Finance Committee nomination hearing, McClellan pledged to work with the committee to develop a system which would allow the FDA to verify the safety of imported drugs.

Many governors and mayors favor allowing their seniors to purchase drugs from Canada, where such drugs are less expensive because of price controls. Currently, the practice of drug reimportation is illegal, though some states and mayors have already skirted the law. States or cities seeking to reimport drugs currently must obtain a waiver from Health and Human Services Secretary Tommy Thompson. The Secretary has so far been unwilling to approve remiportation programs because of safety concerns.

In addition, many conservatives in Congress and the administration are concerned that allowing the reimportation of drugs into America will distort the marketplace and depress the profits of pharmaceutical companies, who typically invest billions of dollars in research and development for new drugs. These lawmakers worry that lower anticipated profit margins will create a disincentive for pharmaceutical companies to continue to develop new drugs. Administration officials have indicated that if drug companies are unwilling to invest in important research because of uncertain returns on investment, it will become even more difficult to find a cure for infectious and deadly diseases that have a smaller profit margin.

Yesterday, the Senate defeated, 46-51, an amendment to the fiscal year 2005 budget resolution that would have resurrected the pay-as-you-go (PAYGO) budget rules that were used in the 1990’s to control deficits. The PAYGO rules require tax cuts and new entitlement spending to be offset with spending cuts in other places or with revenue increases.

This proposal would have imposed the restriction unless the budget was balanced minus surplus Social Security revenue.

PAYGO rules can be overridden with a 60-vote majority in the Senate.

Sen. Pete Domenici (R-New Mexico) and Sen. Russell Feingold (D-Wisconsin) are working on another similar proposal.

The Senate Commerce, Science and Transportation Committee is discussing a bill today (S 2056) which will increase by a power of ten, the current Federal Communications Commission (FCC) fines that can be applied to broadcasters who violate current indecency rules. The companion House bill (HR 3717) has similar language but many provisions have been added since its introduction January 21, some of which don't have as broad a base of support as the Senate version. The newer House version would make it easier for the FCC to fine artists and performers instead of just broadcasters, as well as a proposal to encourage the FCC to revoke broadcast licenses for repeat offenders. Right now there is little consensus as to which provisions in the harsher House version will survive through the process.

The General Accounting Office (GAO) released a report Monday criticizing Amtrak for failing to improve the Northeast Corridor as it planned a decade ago. Amtrak's original goal of a three hour train ride between Boston and New York City is still well below the current high speed travel time of 3 hours and 24 minutes. According to the report, "51 of 72 work elements that FRA identified in its 1994 master plan as necessary to reduce trip times ... are incomplete or their status is unknown." At least $3.2 billion has been spent on the upgrade process so far.

According to CQ, Senator John McCain (R-Arizona), who commissioned the report, agreed with its findings, saying, "I fully support GAO's conclusion that Amtrak did not exercise effective management or oversight of the project." A spokesman for Amtrak, Cliff Black, argued that Amtrak had managed to reduced travel time from 4 hours to 3.5, between Boston and NYC, and that the uncertain appropriations environment over the past several years has hurt the passenger rail agency.

The GAO report is located here and we also have a highlight page, both of which are in .pdf format.

The budget blueprint for fiscal year 2005 is being debated this morning on the floor of the Senate. The majority leaders seek to have a resolution approved by the end of the week. Reconciling the Senate's resolution with the House version (currently scheduled to be in committee March 10) may be difficult, as House leaders may be under pressure to increase funding for defense and domestic programs.

Already, many military systems are feeling the financial pinch during a particularly difficult fiscal year. Senate GOP leaders are attempting to add $7 billion worth of funding to the defense spending level to match the amount requested by the administration. The Senate Budget Committee removed $7 billion from defense spending and $2 billion from domestic spending to pare the administration's request from $823 billion to $814 billion, putting it under the cap established last year as part of the fiscal 2004 budget resolution.

With Senate Appropriations Committee Chairman Ted Stevens (R-Alaska) already committed to designate certain spending as "emergency spending", and thus not fall under the budget resolution, deficit hawks on both sides of the aisle are already conceding the FY05 resolution may not hold spending down in any meaningful sense.