WASHINGTON’S LABYRINTHINE WAYS

By Otto J. Hetzel

Otto J. Hetzel is a professor of law emeritus at Wayne State University and practices law in Washington, D.C.

• Significant Domestic Expenditure Reductions in Proposed FY2006 Budget and Beyond Make Clear Effects That Earlier Tax Cuts and Increased Defense Spending Have Had. Whatever happened to the “lockbox” for the surplus featured in the 2000 election debates? The budget surplus is long gone and deficit spending has taken over. Now the piper will be paid. The President’s proposed 2006 fiscal year budget would eliminate or drastically reduce 154 current federal domestic programs involving cuts of some $15.3 billion from current 2005 fiscal year levels. Even more significant, however, are the cuts in expenditures threatened over the next five years in efforts to reduce the large deficits created as a result of reduced revenues because of tax cuts without reducing expenditures. The deficits were exacerbated by dramatic increases in military and homeland security expenditures as a result of 9/11 events and incursions into Iraq and Afghanistan.

Bush is pressing governors to cut Medicaid benefits or absorb costs that already consume over 20 percent of state budgets and suggesting co-payments be imposed. He is threatening to slash federal support by $60 billion over the next ten years. Aside from terminating more programs, the Administration is talking also about draconian reductions of up to one- half of current funding on many domestic programs under a budget measure committing Congress to make specified reductions in domestic spending over the next ten years.

• President’s Proposal to Transfer Jurisdiction of HUD’s Community Development Block Grant (CDBG) Program to Commerce Department, If Approved, Could Ultimately Result in Demise of HUD. The President has proposed that HUD’s CDBG economic development program that provides funds to local governments be turned over to the Commerce Department. To be renamed, funds for the program would be reduced as well. If CDBG, a major portion of HUD responsibilities, were transferred the remaining Federal Housing Administration (FHA), public housing, HUD’s responsibilities for funding housing for the homeless and disabled, and for fair housing enforcement, might soon be perceived as insufficient to justify a cabinet department, and those programs might be dispersed as well. Normally, such a change would be resisted by members of congressional committees whose authority would be lost, but in this case (as discussed below) the Republican congressional leadership has anticipated the transfer in their reorganizations of their Appropriations Committees. Such a transfer of economic development programs at HUD was considered in the Carter Administration and proposals for eliminating HUD were under review in the Clinton Administration, but avoided by Secretary Cisneros by adopting changes in its programs. HUD’s continuing poor scores in GAO reviews of its administrative competency are not likely to help.

• Changes in Congressional Appropriations Committees in 109th Congress May Affect HUD Funding.
In the House: On February 15, the House Appropriations Committee approved its new chair’s (Jerry Lewis, R– Cal.) reorganization plan. By a party-line vote of 36–24, House Appropriations Subcommittees were reduced from 13 to 10. This eliminated three “cardinals,” as the chairs of these subcommittees are often referred to in recognition of their power over federal spending. Of significance, the changes reallocate jurisdiction over funding for several agencies, including HUD. It now will be included in a bill also providing funding for Treasury and Transportation. EPA and NASA, with whom HUD competed in the past for funding under budget resolution ceilings for subcommittees, were transferred to the Commerce, Justice, State, and Science Subcommittee. The House and Senate Budget Resolutions, to be adopted by April 15 (but frequently delayed), set overall limits for each subcommittee.

The reallocation of subcommittee jurisdictions means competition for funds among various domestic programs has changed. To illustrate what can happen, last year there was a deliberate shortfall of $1.2 billion for veterans’ hospitalization costs in the President’s budget. As anticipated, this was not countenanced by Congress. To make up the omitted costs meant other agencies under that subcommittee, including NASA, HUD, and EPA, took a hit. House Majority Leader Tom DeLay (R–Tex.), a NASA supporter, is credited with helping move jurisdiction over it. The VA now is under the Military Quality of Life and Veterans Affairs Subcommittee. New committee lineups for HUD programs are:

Subcommittee on Treasury, Transportation, and HUD: Republican members: Chair Joe Knollenberg (R–Mich.), Vice-Chair John Sweeney (R-N.Y.), Frank Wolf (R–Va.), Harold Rogers (R–Ky.), Todd Tiahrt (R–Kan.), Anne Meager Northup (R–Ky.), Robert Aderholt (R–Ala.), John Culberson (R–Tex.), and Ralph Regula (R–Ohio). Democratic members: Ranking Member John Olver (D–Mass.), Steny Hoyer (D–Md.), Carolyn Kilpatrick (D–Mich.), James Clyburn (D–S.C.), and Steven Rothman (D–N.J.).

Commerce, Justice, State, and Science Subcommittee (which would have jurisdiction over the Community Development Block Grant program): Republican members: Chair Frank Wolf (R-Va.), Dave Weldon (R-Fla.), Charles Taylor (R-N.C.), Mark Steven Kirk (R-Ill.), Virgil Goode (R-Va.), Ray LaHood (R-Ill.), John Culberson (R-Tex.), and Rodney Alexander (R-La.). Democratic Members: Ranking Member Alan B. Mollohan, (D-W.Va.), Jose E. Serrano, (D-N.Y.), Robert E. “Bud” Cramer, Jr., (D–Ala.), Patrick J. Kennedy, (D–R.I.), and Chaka Fattah, (D–Pa.). One can see those states that might gain in projects as a result of the new lineups.

In the Senate: On March 2, the Appropriations Committee reduced its 13 subcommittees to 12. The former VA/HUD and Independent Agencies Subcommittee was disbanded. Its funded programs were divided up as follows: Transportation, Treasury, the Judiciary and HUD gains HUD and related agencies and Judiciary from CJS; Interior gains EPA and related accounts; Commerce, Justice, and Science gains NASA, NSF, Office of Science and Technology Policy, but loses Judiciary and State; Energy and Water gains energy related accounts from Interior; Labor, HHS and Education gains Corporation for National and Community Service from VA/HUD; Military Construction and Veterans Affairs gains Veterans Affairs and related agencies; State, Foreign Operations gains State Department from CJS. The HUD-VA leaders, Kit Bond (R–Mo.), takes over as chair of Transportation, Treasury, the Judiciary, and Barbara Mikulski (D–Md.) becomes ranking member on Commerce, Justice, and Science.

• Restrictions on State Class Action Lawsuits Enacted as First Order of Business for Second Bush Administration. Wasting no time in flexing its higher majority in the Senate, along with sufficient concurring Democrats to forestall a filibuster, Republicans passed a measure that restricts consumers’ ability to use state courts for class actions. To be applied only prospectively, Bush signed the bill immediately on February 17, 2005. Thereafter, class-action suits seeking $5 million or more would be heard in state court only if the primary defendant’s principal place of business and more than one-third of the plaintiffs are from the same state. Otherwise, the case must proceed in federal court. There, however, federal court rules restricting class action make establishing a class much more difficult. So much for states’ rights.

Changing the legal system and, in particular, class-actions, medical malpractice, and asbestos injury lawsuits to provide some insulation for business from potential large damage awards, has become a priority of the Bush Administration responding to business requests. The lawsuit limitations are being justified on the basis of a “litigation crisis” that is seen as allowing lawyers to reap huge fee awards while businesses and consumers are stuck with the bill, the latter often getting only small sums or discount coupons for products of the company they just sued.

• Limits on Consumer Use of Bankruptcy Now Appear Likely to Be Enacted. A similar bankruptcy bill was pocket-vetoed by President Clinton, and Republicans could not garner sufficient votes to overcome a filibuster in the first Bush Administration to re-enact it. With an increased Republican Senate majority, the Bankruptcy Reform Act, S. 256, passed 74–25. Backed by credit card issuers who flood most consumers with unsolicited offers of credit, the restrictions are being justified on the grounds that those who overspend should not be allowed to avoid their debts. A new means test compares income and expenses to determine who can use Chapter 7, and erase their debts, and who must file under Chapter 13, that requires a repayment plan. As Senate Judiciary Chair Arlen Specter (R–Pa.) notes, the vast majority of filers have nothing to pay their creditors and use bankruptcy as a last resort.

The bill as now formulated, however, does not distinguish between those who are thrown into bankruptcy because of circumstances beyond their control, such as for medical costs not covered by insurance or inability to find employment. A study by Harvard Law School Professor Elizabeth Warren found that illness or medical bills had driven half of those surveyed into bankruptcy. The new bill does not close current loopholes for the wealthy’s assets to avoid repayments, through “asset protection trusts” available in five states, or the purchase of expensive homes.

• Judicial Wars Renewed: Confrontation Increases over Bush Judicial Nominees. While only 10 Bush appellate court nominees have not been approved, the Senate in the 108th Congress confirmed 204 of his judicial nominees that reached the Senate floor. The President has re-nominated seven of those previously blocked by Democratic filibusters. Three of these are from Michigan, where neither party has approved a nominee for the Sixth Circuit’s current four vacancies since July 1997 in the beginning of Clinton’s second term. Another five nominees whose candidacies were slowed by objections or issues and were not voted out of the Judiciary Committee were also re-nominated. Democrats, led by Jack Reid (D–Utah), the new Minority Leader, called the seven previously unable to obtain approval “extremists.”

Judiciary Chair Arlen Spector (R–Pa) has warned that both parties have allowed the battle over federal appellate judgeships to escalate to a dangerous point where neither is willing to back down. For example, after Democratic filibusters, Bush responded by making unprecedented recess appointments to appellate courts for terms that lasted only through the last Congress of several candidates unable to gain confirmation.

Sixty votes are needed to overcome a filibuster. Senate Majority Leader Bill Frist (R–Tenn.) has threatened if Democrats continue to reject these nominees to ask the Vice-President to rule filibusters of judicial nominees unconstitutional, a ruling that could be sustained by a majority vote. Robert Byrd (D–W.Va.) has pointed out that such an action would counter a historically recognized inherent attribute of the Senate permitting unlimited debate. Getting enough votes is problematic since many senators recognize the danger of such a precedent being turned on them when majority control changes. If carried out, Frist’s threat is likely to throw the Senate into complete disarray resulting in delaying tactics impacting all its business. The stakes are high.

• Justice Department to Appeal Third Circuit Holding That Universities Can Bar Military Recruiters Because of Military Discrimination Against Gays. Supported by a nonbinding House Resolution (adopted 327–84) requesting the appeal, Justice will ask the Court to reverse the 2–1 ruling that schools may still receive federal funds while barring military recruiters from campus despite 1995 legislation (the Solomon Amendment) requiring schools to provide access to recruiters as a condition of receipt of federal funds. The Third Circuit relied on a Supreme Court decision allowing the Boy Scouts to exclude gay scoutmasters.

• D.C. Circuit Restricts District Court Order That Interior Department Provide a Historical Accounting of Indian Trust Funds. While earlier sustaining Judge Lamberth’s finding that Interior officials had breached their duty to oversee accounts of 300,000 Indians because of mismanaged oil, gas, timber, and grazing royalties and his power to fashion an equitable remedy, the D.C. Circuit found his order unacceptable that Interior perform a historical accounting rather than use less expensive statistical sampling to determine how much is owed Indian account holders. The appeals court said -“the [district] court has sought to make the law conform to the court’s view as to how the trusts may best be run.” Noting that Congress had inserted language in Interior budget legislation that Congress must be consulted on the scope of the accounting required, the appeals court determined this “appears to give Interior temporary relief from any common law or statutory duty to engage in historical accounting.”