Congress Raises the Debt Ceiling
On Tuesday, February 11, the House of Representatives passed S. 540, a bill to raise the debt ceiling and allow borrowing authority to continue through March 15, 2015. The final recorded vote in the House was 221 – 201. On Wednesday, the bill passed the Senate with a recorded vote of 53-44.
S. 540 is a “clean” bill, meaning that there is no divisive language or controversial amendments that could have potentially derailed its passage. There was legitimate concern that a debt ceiling increase would have had partisan contingencies, such as a change to the Affordable Care Act, an extension of unemployment benefits, or additional spending cuts. In September 2013, some lawmakers attempted to tie an increase to the debt ceiling with adjustments to the Affordable Care Act. This maneuver sparked partisan conflict and the nation came close to a debt default since lawmakers disagreed over raising our borrowing authority with no strings attached. The passage of S.540 marks the first debt-ceiling increase that was not linked to other controversial legislation since 2009.
A previous debt ceiling stalemate from 2011 shook up markets and eventually caused a downgrade of the United States’ credit rating for the first time in our nation’s history. According to a report released in 2011 by the credit rating agency Standard & Poor’s, “The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.”
President Obama is expected to sign S.540 into law.
To read more about S. 540, please follow
this link.
Budget Process Reform Legislation
On Tuesday, February 11, the House Budget Committee held a markup hearing for two bills which would reform the budget process in the Federal Government. The first of these bills is H.R. 1872, the Budget and Accounting Transparency Act of 2014, which was introduced by Representative Scott Garrett (R-NJ) in May of 2013. This bill would revise the budgetary treatment of federal direct loans and loan guarantees to account for them on a “fair value” basis. Fair value is an accounting term used as a certainty of the market value of an asset or liability for which a market price cannot be determined. According to an online summary of the bill from the House Budget Committee, a fair value model would bring federal budgeting in line with private-sector cost-estimating practices when offering loans or loan guarantees; both the borrowing costs and the risk the federal government is incurring must be considered.
Beginning with FY2015, H.R. 1872 requires any new budget authority in the President’s budget to be provided in advance under an appropriation Act. Furthermore, any direct loan or loan guarantee made by the Government Sponsored Enterprises (GSEs) Fannie Mae or Freddie Mac may not represent an entitlement. A direct loan means a loan given by the Government to a non-Federal borrower under a contract that requires the repayment of such funds with or without interest.
According to the same online description of the bill from the House Budget Committee, this change will increase recognition of the budgetary impact of the GSEs. The current on-budget status treatment for the GSEs would be terminated after their conservatorship has been terminated or after the Director of the Federal Housing Finance Agency (FHFA) has certified in writing that the GSE has repaid to the federal government its financial assistance.
The other reform bill, H.R. 1869, was introduced by Representative Reid Ribble (R) of Wisconsin in May of 2013. This bill would overhaul the Congressional Budget Act of 1974 by requiring biennial (instead of annual) budget resolutions, biennial appropriations Acts, and biennial government strategic and performance plans. According to the description of this bill, a biennial budget and appropriations cycle “would allow Congress to focus on budgeting and appropriating in one year and program authorizations and oversight in the second year.” The Appropriations Committee would complete appropriations bills in odd-numbered years that would contain appropriations for two years. Even-numbered years would be reserved for Congressional oversight and Congressional consideration of authorization legislation. Authorization bills would be required to have at least a term of two years.
A “markup hearing” such as this refers to process through which members of a Committee can debate, amend, and rewrite legislation. H.R. 1872 passed the Committee with a final vote tally of 17 to 8. Ribble’s H.R. 1869 passed the Committee with a final vote tally of 22 to 10. The bills have yet to receive votes by the entire Congress, but the implications of them are considerable. NAHMA will continue to follow the progress of these bills.
To view a summary of these bills, please follow
this link to the House Budget Committee website
Senate Finance Committee has a New Chairman
Senator Ron Wyden (D-OR) is the new Chairman for the Senate Finance Committee, replacing former chair Max Baucus (D-MT) who has been chosen to serve as the U.S. Ambassador to China. The Finance Committee overseas tax related matters and revenue use by Congress. It has six subcommittees that examine specific areas within the Committee’s jurisdiction. It is considered one of the most powerful committees in Congress.
In a statement on his new position, Wyden said: “The goal of any Finance chairman is to preserve and improve the ability for American families to get ahead and American businesses to succeed. In the early days of my Chairmanship I intend to meet with my colleagues to find the right paths forward on reforming the tax code”. NAHMA has been monitoring the Senate Finance Committee’s tax reform proposals since the Low-Income Housing Tax Credit could be amended or even eliminated. We will continue to advocate to Senator Wyden and the members of the Committee on the importance of retaining tax incentives that benefit the affordable housing industry.
To view Wyden’s statement on his Chairmanship, please follow
this link to the Senate Finance Committee website.
