10/6/2008
End of Congressional Session Brings Huge Spending Spree
Congress went into recess late last week after passing two financial bills meant to address the current economic crisis and to fund federal programs into the next administration.
On Friday afternoon, the House approved by a vote of 263-171 a $700 billion bailout/rescue package for the nation's financial system. 172 Democrats and 91 Republicans voted to pass the Emergency Economic Stabilization Act of 2008, just four days after the House defeated a similar proposal. On Wednesday, the Senate passed the bill by a vote of 74 to 25 after adding the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 and the Energy Improvement and Extension Act of 2008. These bills were being prepared all year long, but were attached to the rescue package as a sweetener to attract the votes of additional Members of Congress. The President quickly signed the bill on Friday afternoon.
Based on the stock market’s reaction on Friday and the beginning of this week to the passage of this bill, it would appear that the economy is in for a difficult time. How the economic downturn will affect the prospects for health care reform in the coming Congress or the Medicare debate scheduled to occur in 2009 is anyone’s guess, but these debates will presumably be much tougher in light of the financial pressures facing the country.
Also last week, President Bush signed a Continuing Resolution (“CR”) set to expire in March of 2009. The CR funds at FY 2008 levels all federal programs for which a separate appropriations bill was not passed. The package only includes full FY 2009 appropriations bills for Military Construction and Veterans Affairs, the Department of Defense and the Department of Homeland Security. This means that the incoming Congress and the new President, whoever that may be, will need to immediately address FY 2009 federal spending on agencies such as the National Institutes of Health, the Department of Health and Human Services, the Department of Labor and the Department of Education.
On another fiscal issue, the Senate failed to reach “cloture” on a separate economic stimulus package. This means that not enough Senators were willing to bring the bill to a vote on the merits of the legislation and killed the bill on a procedural vote. The stimulus package contained a temporary increase of 1% in the Medicaid “FMAP,” a formula that determines how much money the federal government sends the states to match the amount they spend on Medicaid beneficiaries. This 1% increase amounted to over $19 billion in additional spending over a five year period.
Before leaving Washington for the Congressional recess, Senate Majority Leader Harry Reid (D-NV) announced that the Senate will be in session from November 17-19 for organizational purposes for the new Congress and to provide orientation for newly elected senators. There is a small chance that this will offer the Senate the ability to continue to debate legislation, but the House is not expected to return again until next year, unless the economy forces them back into session.
