Government Relations

Government Relations Legislative Update

Government Relations Legislative Update

Updates on state and federal issues relating to the UW System.

Wednesday, July 27, 2011

Federal Update for July 27, 2011

Yesterday, each Chamber of Congress released details of competing measures intended to raise the debt ceiling.  

Originally, the House Republican leadership had hoped to vote on its proposed solution sometime today.  That plan hit a snag, however, as the Congressional Budget Office (CBO) has scored the savings in the bill at $850 billion over 10 years and not at $1 trillion as the Republican leadership had previously claimed.
This development has forced the sponsors of the measure to pull the original bill to make modifications.  The situation still remains very fluid.

House package (as of yesterday)

The version of the text released yesterday, before the CBO score, would allow the debt ceiling to be raised by a total of $2.5 trillion in two phases.  The first step would essentially increase the ceiling by $900 billion:  The president's certification that the ceiling would be reached would automatically trigger an increase of $400 billion.  If Congress does not approve a resolution of disapproval within a very short period of time, then the ceiling would be raised again by $500 billion.  It is believed by many that this process would enable government borrowing through the beginning of 2012.

The second phase would authorize the President to raise the ceiling by another $1.6 trillion, but only if Congress adopts at least $1.6 trillion in cuts recommended by a bipartisan and bicameral deficit reduction committee.  The committee would be appointed by the Senate and House leaders and would be tasked to find ways to reduce the deficit by $1.8 trillion over the next 10 years.

In addition the addressing the debt ceiling, the House language would also impose a discretionary spending cap on each of the next 10 years, including a specific cap for defense for FY2012 and FY2013.

The legislation also calls for a balanced budget amendment to the Constitution.

It also explicitly addresses student financial aid in a number of ways:  

First, it seeks to provide additional mandatory funding for the Pell Grant program:  an increase of $9 billion in FY2012 and $8 billion for FY2013.  The summary document notes, however, that the legislation would provide a total of $13 billion over two years.

The House package would also eliminate subsidized federal loans for graduate and professional students starting July 1, 2012.  After an initial review of the language, it appears that there is an exemption for students in prerequisite courses for degrees or certificate programs, including those in teacher certification/credentialing programs.
The bill would also eliminate on-time payment incentives for direct loans made after July 1, 2012.   Under the bill, these higher education provisions would also be exempt from the Department of Education's negotiated rulemaking and master calendar requirements.

Senate proposal

Unlike the House legislative package, the Senate proposal introduced by Majority Leader Harry Reid (D-NV) would immediately raise the debt limit by approximately $2.7 trillion.

The Senate bill would also impose discretionary caps over the next 10 years, including specified caps on defense for FY2012 and FY2013.  In addition, it calls for the creation of a joint committee on deficit reduction.

With respect to explicit language on student aid, the Senate proposal appears to be slightly more generous to the Pell Program, with an additional $10.5 billion in mandatory funds in FY2012 and $7.5 billion in FY2013.  This legislation also eliminates subsidized loans for graduate and professional students, but does not include the exception in the House bill.  It does not address the loan repayment issue but does include the same language on negotiated rulemaking and the master calendar.

(APLU and the UW System Office of Federal Relations contributed to this report.)