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.

Thursday the House Appropriations Transportation-Treasury subcommittee approved by voice vote a $90 billion spending bill which cut the federal-aid highway program by nearly $1 billion from $35.7 billion. This figure is lower than the $37.9 billion the Senate authorized for highway programs, while the president recommended maintaining the $33.6 billion highways received for fiscal year 2004. The Federal Transit Administration had $17 million cut from the current level of $7.249 billion, and the New Starts Program was cut $286 million from the current level of $1.32 billion. House appropriators endorsed Bush’s proposal to cut Amtrak’s funding from $1.225 billion this year to $900 million. This is only half of what Amtrak sought.

House Minority Whip Steny H. Hoyer (D- Maryland) offered an amendment that was adopted to the Transportation-Treasury spending bill by voice vote limiting the outsourcing of government jobs. This amendment, which would bar the privatization of many government jobs, is opposed by the Bush administration, which has made privatizing government jobs a top priority. Ernest Istook (R-Oklahoma), the Chairman of the Appropriations Subcommittee on Transportation also opposed the amendment and hopes to remove the provision on the House floor. Hoyer’s amendment is similar to a provision in last year’s Transportation-Treasury bill that was watered down when faced with the threat of a veto.

The cancellation of the July 15 meeting of House and Senate confeees on the TEA-21 reauthorization did not cancel the behind-the-scenes manuevering in search of an agreement on the funding level.

We are receiving widely different reports from key staffers in the House and Senate. House GOP staff are hoping that a conversation late on the 15th between Chairman Don Young and the White House produced a positive signal from the administration that they could live with a funding level around $295 billion. "Live with" under one scenario we heard could mean the President would veto the bill, but not fight an attempt to override his veto.

We continue to be skeptical the White House will back down at all on its insistence for nothing more than $256 billion. It is hard to conceive of President Bush standing by while the only veto of his administration is overridden by a GOP-controlled Congress.

Meanwhile, Senate Democratic staff indicated to us yesterday they are holding firm at nothing below $318 billion as an acceptable funding level. If they are able to stand firm on that and are not excluded from the process as it unfolds, it is clear there will be no bill before the election.

The bottom line is we end the week exactly where we started. There is no number from the House, no sign of compromise from the White House and continued pressure from the Senate for a response to their offer of $318 billion.

Rep. Jim Oberstar said yesterday that if there isn't a deal by the time Congress leaves for recess on July 23, the chances for a bill this year are slim. The man from Minnesota knows whereof he speaks.

More details to follow as the situation warrants.

Belying the positive rumors that were flowing from House Republicans as late as yesterday evening, the Conference Committee on TEA-21 postponed today’s scheduled meeting indefinitely. House conferees were expected to make a counter offer to their Senate colleagues at this meeting. While not signaling a total breakdown in negotiations, this development indicates the difficulty in bringing together the members of such a large and significant conference committee. Senior level staffers on the Committee for the Environment and Public Works tell us that talks are continuing. We are monitoring the situation closely and will post any updates we receive.

No new date or time has been set. We'll pass along updates as we receive them.

The House Appropriations Committee approved by voice vote yesterday the FY 2005 funding bill for the Departments of Labor, Health and Human Services and Education. True to form the large spending bill attracted a number of amendments dealing with social policy.

The committee voted to approve the spending bill after rejecting a Democratic amendment to block new Labor Department overtime pay rules. The Committee also adopted language that would tighten existing curbs on the federal funding of abortions. The House leadership has said that the contentious abortion issue and the busy House schedule make it unlikely that the Labor-HHS bill will be debated on the floor before the August recess.

The bill would provide $142.5 billion in discretionary funding, $3.1 billion more than allocated in FY 04 and $202 million more than requested in President Bush’s FY 2005 budget request.

The Labor-HHS measure, approved by subcommittee on July 8, totals $492.3 billion when mandatory entitlement programs, such as Medicaid are included. Democrats have criticized the bill, saying it does not provide enough funding for cash-strapped states and school districts that are struggling to meet the requirements imposed under the 2001 education overhaul.

House and Senate conferees on the TEA-21 Reauthorization will meet at 3pm today (July 15) to review the House response to the Senate's offer on the overall funding level for the six-year bill. Rumors are rampant and cover almost every potential outcome. It appears to us the House will offer a six-year funding package between $285 and $300 billion -- depending on how you count.(The difference being whether you count "guaranteed" funding or "contract authority.")

While reports differ on the participation of House and Senate leaders in developing this proposal, it appears clear the White House has not yet expressed a view. So, this would appear to be another iteration of the "trial ballon" strategy from Capitol Hill. If they don't get a "no" from the White House in short order, Congressional leaders may view that as tacit approval.

Some Democrats have been sticking with the $318 billion number as the minimum acceptable level. Their concern is that advancing the bill at a lower number without White House approval is part of a "trap" which would get Congress into a negotiation with the White House between the new congressional number and the White House number. This would yield a result well below the new number from the conferees. This would repeat a pattern established on other major legislation in this congress.

We will have news for you as soon as it is available.

Tuesday the Bush administration submitted a report to Congress showing how the Patriot Act has been used successfully to prosecute terrorists and other criminals as an effort to counter congressional criticism. Evidence of this criticism can be seen when the House barely rejected a measure last week that would have prevented the use of the section of the law (PL 107-56) that made bookstore and library records available during terrorism investigations. According to Attorney General John Ashcroft, the 29-page report, which outlines case studies of how the law has been enacted, provides “a mountain of evidence” of the law’s benefits. Ashcroft urged Congress to renew the law, which he said had been instrumental in terrorist investigations leading to charges against 310 people, of whom 179 were convicted. Several of its provisions will otherwise expire in 2005. Critics are suspect of the report, pointing out that the administration simply highlighted positive examples while ignoring the many civil rights abuses the law has allowed.

The House is expected to vote today on an amendment to the fiscal 2005 agriculture bill that would allow over-the-counter sales of the “morning after” pill, reversing a recent decision by the Food and Drug Administration. The FDA’s May 6th announcement that they would no longer allow non-prescription sales of the contraceptive Plan B after voting to allow it in December 2003 has caused Democrats to accuse the FDA of caving to political pressure from conservative groups. This amendment, offered by Democratic Representatives Carolyn B. Maloney of New York and Henry A. Waxman of California, faces opposition from Republicans who believe the drug could increase teen pregnancy.

Debate on the $83.7 billion agriculture appropriations bill began Monday and a vote is expected Tuesday. Democrats protested that the $16.8 billion in discretionary spending, which is below the fiscal 2004 level, will not be enough to fund essential programs.

The House-Senate Conference Committee on TEA-21 has postponed its meeting scheduled for tomorrow (July 13) amid signs the House may be preparing an offer that would improve prospects for movement on the legislation.

House GOP staffers are reporting that their side may be prepared to offer a funding package of $285 billion in obligation authority with $295 billion in contract authority over the six-years. Which number you choose to emphasize is really a matter of packaging. The offer would reportedly include bringing the highway program Minimum Allocation up to 93% of a state's contribution to the Highway Account of the highway trust fund. It is unclear how it would treat other elements of the House bill, such as Projects of National Significance and High Priority Projects.

This "offer" has all the hallmarks of a trial balloon being floated to see how various parties react. If the White House were to shoot it down in the next few days, deliberations would be back to square one. On the flip side, if the Senate were to indicate interest and the White House remains silent, it is possible some productive discussions could finally begin on the legislation.

We will -- as always -- stay on top of developments.

As Congress kicks off its workweek, here is a quick look at the what to expect on transportation issues.

Reauthorization of TEA-21

The House-Senate Conference is slated to meet tomorrow -- July 13 -- to discuss again the overall funding level for the program. Since last week's meeting, at which harsh words were exchanged, we have seen little sign of compromise between the three parties -- the House, the Senate and the Administration. Tuesday's meeting will be important in that it may determine whether or not conferees can find a way to move forward in the absence of an overarching agreement on funding. It will also potentially be a forum to discuss the extension of the programs, now due to expire on July 31. Congress departs for a five-week recess on July 23, so action on the extension will need to take place by then. Staff members have still not discussed any controversial issues.

Appropriations

The House Appropriations Committee Subcommittee on Transportation-Treasury is planning to mark-up on July 15 its version of a fiscal 2005 spending plan for agencies under its jurisdiction. Full committee action is slated for July 23. Because of the lack of an authorization bill, the funding levels for highway and transit to be included in this legislation are very much up for grabs. Chairman Ernest Istook (R-Oklahoma) is playing it close to the vest and very little is known about his intentions for key programs. We are hearing there is a strong potential that because of the uncertainty over the authorization process and, therefore, the final funding levels, project earmarks may NOT be included in either the subcommittee of full committee version of this legislation. This would leave the committee maximum flexibility to make adjustments in conference in the event a reauthorization bill is done by that time.

Over on the Senate side, it appears action will be delayed until September. However, we are keeping a close eye on the situation there as it seems to be quite fluid.

We will have updates throughout the week as developments unfold.