State & Local News Vol. 23, No. 4, Summer 2000 Washington's Labyrinthine Ways By Otto J. Hetzel Another Election Year Budget Showdown Looms. The Republicans have generated their own budget resolution this spring for fiscal year 2001 that starts October 1, 2000. No pretense was made of making it a bi-partisan effort. The only major area of agreement with Democrats involves reservation of some $40 billion for a prescription drug plan for Medicare recipients, but since there is no agreement on how to structure such a benefit, this popular idea still will be contentious before it is resolved. The House and Senate Appropriation subcommittees largely ignored most of the President's proposals as their funding bills for government agencies start to move in Congress. Thus, the potential for another showdown with the President exercising his veto powers that could result in a government shutdown clearly exists. Philosophical Battles Over Education Funding. Given the importance being placed on education issues by the two candidates running for President, a major battle is likely to occur over federal funding for education. While the bills would boost spending for Head Start and the Education Department, each house "fails to support our nation's children and schools," according to the President. Further funding for additional teachers and for school construction and repairs was essentially ignored in the House bill and limited in the Senate version, which increased flexibility for states in allocating funds. The Senate also made substantial cuts in funds for day-care, after-school centers, and social services. Such measures will provide the battleground for conflicting party positions on which November's elections will be fought. Only thirty-five or forty days remain in which all legislation must be concluded before recess for elections. Whether renewal of the 1965 Elementary and Secondary Education Act, which shapes the federal role in funding for local schools, will occur seems doubtful. Last renewed in 1994, the dramatic difference in positions of the parties over how the funds could be used and who would make that decision, federal or state administrators, suggests that agreement on renewal is unlikely. If so, the current act would still continue. Republican proposals would change funding from more discrete programs with federal targeting to block grants from which states could select how the funds would be used. In part the conflict is whether to allow for innovation by states or keep the existing federal priorities. The policy differences are also highlighted in Republican proposals to allow for use of educational vouchers in 20 percent of the states. In the face of general dissatisfaction with the job being accomplished by public education, continuation of existing programs seems risky. The battle over philosophy, however, may also fall victim to threats by Democrats to attach gun control provisions to the legislation using school shootings as the justification. That would certainly kill the bill, dead, given the disparity between the parties positions over gun control. Estimates of This Year's Budget Surplus Increase. The Congressional Budget Office now estimates that, without counting Social Security surpluses, the federal budget surplus should exceed $40 billion. Earlier it actually predicted a deficit of $17 billion aside from a $129 billion surplus in Social Security revenues over payments. Conflicts over how to use the increasing budget surplus also continue. While the candidates spar over how to handle Social Security for the future, Republicans call for significant tax cuts (Bush has proposed a $460 billion cut over five years). These cuts collide with Democratic positions that would allocate non-Social Security surpluses both to undergird Social Security's viability and to write down the national debt. The increasing surplus target makes the rationales for distribution more difficult, although the Budget Office warns that long-term surpluses should not be assumed. Some compromise on how the funds will be used this year seems likely. 1997 Budget Ceilings Find Few Adherents. The budget ceilings that were agreed to by the President and the congressional leadership in 1997 have by now either been totally eviscerated by budgetary techniques or just plain ignored for the most part in this and last year's budgets. These amounts were intended to constrain expenditures, requiring reductions in each annual appropriations legislation (unless an emergency situation justified overriding limits) to keep within the ceilings that ratcheted down annually, making reductions increasingly draconian in nature. As the current economic upturn has generated increasing government revenues, and the focus has become how to use the surpluses now being experienced, justification for the earlier budget agreement has been undercut. Few in Congress have been committed to maintaining the ceilings because they distort actual needs as between various programs or limit Congress' flexibility to meet changing priorities. Last year's budget was rampant with technical approaches to avoid the effects of the ceilings, including labeling such costs as those for the decennial census as emergency in nature. A variety of budget legerdemain has frequently taken place to meet the now ignored ceilings, limited only by the creativity of the drafters. For 2001, Republicans essentially decided to allow spending to continue to grow at slightly less than the inflation rate. The main issue this election year is whether the death of the ceilings will be acknowledged or just quietly fall by the wayside. Two-Year Budgeting Cycle Supported by Republican Congressional Leadership. Over thirty years ago, biennial budgeting was used for many programs to reduce the need for more frequent congressional attention to complex budget measures involved in annual appropriations legislation. When the Nixon Administration came into office, this practice was terminated so as to allow the new administration to impose its philosophy on how funds would be used and how much money would be spent in place of the priorities of the prior administration. How the worm turns. The Republican leadership, in a proposal supported by the President, is now advocating that Congress once again go to two-year cycles for appropriations legislation. In the Senate, the chair of Appropriations, Senator Ted Stevens (R-Alaska) and Ranking Minority Member, Senator Robert Byrd (D-W. Va), while opposing the measure calling it "unwise," have indicated it should come to a vote and that no constitutional inhibition appears to exist to two-year budget cycles. Byrd intends, however, to try to limit its use to a trial period of four years after which the approach will require reauthorization. Oversight would still occur in odd years regarding how the funds were spent. In addition, supplemental appropriation acts are frequently required because of changes in circumstance or to meet emergencies. This reduction in frequency and numbers of appropriation bills appears to have been stimulated by the 1995 confrontation between the Republican-controlled Congress and the President, when two government shut-downs occurred that primarily impacted negatively on Republicans. Since then, budget negotiations each year have dominated much of the congressional agendas for the year and omnibus appropriations acts have had to resolve disputes over individual cabinet department funding. Proposed Amendments to Bankruptcy Revisions Threaten to Amend Fair Debt Collection Practices. Currently federal law limits what debt collectors can do to try to obtain payments on alleged debts. The pending Bankruptcy legislation, differing versions having passed in each House, finally appeared headed for conference committee and enactment. Senate Judiciary Chair Orrin G. Hatch (R-Utah), however, has proposed amendments that would exempt debt collectors from provisions in the Debt Collection Act preventing harassment, such as invasion of privacy, false or deceptive representations, unfair or abusive collection methods, and improper fees, where collection involves checks rejected because insufficient funds were in the account. Permitted practices when checks were not made good within thirty days after notice of insufficient funds would include harassing calls at all hours and false threats of criminal prosecutions or of imposition of substantial additional fees. At issue is whether checks constitute "debts" under the Debt Collection Act. The legislation would reverse Federal Trade Commission and court decisions that have held that checks constitute debts and are covered. While provisions have been added to the bill requiring information be provided to credit card users regarding how long it can take to pay off debt with minimal payments and the compounding effects of interest, issues relating to the value of houses protected and defining persons who can "afford" to repay part of their outstanding debt have not yet been resolved. Another issue is a provision in the version passed by the Senate that would allow credit card issuers to insert provisions in the fine print of cardholder agreements or lenders in loan documents that would routinely waive a user's current protection for retirement assets from being seized in bankruptcy. Pension funds covered by ERISA, defined benefit, and 401K plans would still be protected, but if funds were later rolled over to IRAs or were in state pension plans, waivers could apply. With few days left for consideration of such legislation in this session and prospects dim if control of the House changes in the coming election, there is a real pressure for proponents to enact the legislation now. Inclusion of the $1 per hour increase in the minimum wage over three years and for tax breaks for small businesses in the Senate version also raise constitutional issues over whether adoption of the Senate version could be considered as having improperly allowed that body to initiate a tax increase. The race for enactment is likely to go down to the wire. Judicial Confirmations Continue to Lag Compared to Earlier Election Years. As of May 11, 2000, the Senate had confirmed only seven nominees this term. Six are pending on the Senate floor, thirteen are still pending in the Senate Judiciary Committee following their hearings, and twenty-eight have not yet had a hearing. Sixty-seven vacancies existed at the start of the present Second Session of the 106th Congress, but despite the seven confirmations, eighty vacancies now exist due to attrition. Of these, twenty-two are in courts of appeals and fifty-eight in district courts. In 1996, seventeen judges of the forty-nine nominees pending were confirmed, fifteen of them in July and August. All were district court judges. In 1992, by contrast, sixty of the 112 nominees of then President Bush were confirmed. Twenty-one of the currently vacant positions are classified as judicial emergencies in the busiest of the courts, both courts of appeal (twelve) and district courts (nine) overwhelmed with immigration and drug cases. Democrats are pressing for confirmation of three-quarters of the pending nominees and threaten to increase quorum calls and refuse to allow committees to meet while the Senate is in session, if greater progress is not made. Your correspondent Otto J. Hetzel is a Professor of Law Emeritus at Wayne State University and practices law in Washington, D.C. State & Local Law News home page | Table of Contents