Obama Issues Call For Spending Freeze
When President Obama sends his 2011 budget plan to Capitol Hill, he will propose freezing non-defense discretionary spending—which includes most construction programs—at 2010’s level for the next three years. Construction executives hope Obama will keep some infrastructure line items unscathed or maybe even recommend some hikes. But the final numbers are up to Congress and won’t emerge until after months of partisan, election-year budget battling. Complicating the picture further, Democrats have seen their razor-thin, filibuster-proof 60-vote majority slip to a vulnerable 59 votes with Republican Scott Brown’s win in the Jan. 19 Massachusetts Senate race.
That outcome quickly caused Democrats to revisit their plan for health-care legislation, probably aiming for a less-sweeping Plan B. While construction officials watch health-care developments, they also are trying to figure out how the changed Senate landscape will affect other bills. Some of the most important involve money: a possible new jobs-producing bill, 2011 appropriations and surface-transportation reauthorization.
Stephen Sandherr, the Associated General Contractors’ CEO, says the path to getting increased infrastructure funding through Congress already was a steep one before Brown’s victory. Now, Sandherr says, that election’s outcome “makes the climb just a tad steeper.”
In drawing up the proposed spending freeze, White House officials decided not to call for an across-the-board percentage cutback. Instead, Rob Nabors, the Office of Management and Budget’s deputy director, told reporters on Jan. 26 they are recommending that overall “non-security” funding be held for three years at 2010’s level of $447 billion. Programs exempted from the cap are those at the Depts. of Defense, Veterans Affairs and Homeland Security, as well as the international affairs category.
“It is a top-line freeze,” Nabors says. “It is not a freeze on every agency or every program.” In words that may give hope to public-works advocates, he adds, “There are going to be increases for certain presidential priorities.” Nabors declined to provide many specifics but did say some items that are “most important to the President” include “things like education, things like energy research. They’re at the top of the list.”
Congress is nearly certain to pass appropriations for fiscal year 2011, which starts in less than nine months, though lawmakers almost surely will act later rather than sooner. Obama’s freeze proposal will only intensify the pressure to hold down spending that has been in evidence long before Brown’s win in Massachusetts.
As the 2011 appropriations round nears its start, Greg Cohen, president of the American Highway Users Alliance, notes that Obama has publicly supported a new jobs bill and more spending on roads and bridges. Cohen says, “Our hope is...that highways will still do OK” under the proposed freeze.
“But frankly,” he adds, “right now we’re under a freeze until we get some momentum on a multiyear bill.” The last multiyear highway-transit measure expired on Sept. 30, 2009, and the programs have been running under extensions since then. Cohen and other veterans of the transportation bill tussles don’t see the Democrats’s thinner majority as affecting the outlook for a new long-term highway-transit bill. “Frankly, we don’t see reauthorization being done before the [November] election,” he says. The same barrier remains in place: not enough congressional support for raising the motor-fuels tax to pay for the major increases industry and its allies desire. Even so, lawmakers aren’t likely to let the highway and transit programs lapse, which means another stopgap measure is coming.
Another top construction priority is a jobs bill to follow last year’s American Recovery and Reinvestment Act. Obama has called for a new bill, with infrastructure spending. Industry supported the $154-billion jobs bill the House...
...passed in December, which includes $47 billion for highways, transit and other public works. But progress has been slow in the Senate, where Democrats have been working on their proposal for weeks. One relief for construction interests is that the Obama freeze wouldn’t apply to programs funded by ARRA or a follow-on jobs bill.
Jobs Bill on Tap
Starting well before the Jan. 19 election, there have been differing views on how to pay for the jobs bill. Pam Whitted, National Stone, Sand and Gravel Association vice president for government affairs, says Democrats prefer drawing on funds from the Troubled Asset Relief Program (TARP)—the approach taken in the House-passed bill. But some Republicans oppose using TARP money and instead want to tap unspent ARRA funds.
One industry source, who prefers anonymity, gives the jobs bill a good chance of approval after Brown’s election. “I think it’s going to go,” he says. His reason: Both parties agree Massachusetts voters’ made clear that economic security is their top concern. Says the source, “If Congress misses that message, I think they’re missing the boat totally. I think they’ll pay in November—all incumbents.”
If Democrats can find a way to pass a new jobs package, the industry source says, its added infrastructure funding would be a “safety valve” for appropriators “to allow those [FY 2011] programs’ numbers to come in lower than what otherwise would be politically necessary.”
Brown’s victory has had the most immediate impact on health care. The day after the election, ABC News aired an interview with Obama in which he indicated that he is open to compromises on a health-care measure, a vital issue to his administration. Obama said, “I would advise that we try to move quickly to coalesce around those elements of the package that people agree on.”
Health Care on Life Support
Senate Majority Leader Harry Reid (D-Nev.) said, “No decisions have been made” on how to proceed on health care. Minority Leader Mitch McConnell (R-Ky.), when asked whether the current version of health-care legislation was dead, replied, “I sure hope so.” Construction industry sources say they see little chance the two very different bills that passed the House and Senate will advance.
In the House, Speaker Nancy Pelosi (D-Calif.) told reporters on Jan. 21 the Senate-approved bill in its current form “does not have the votes” to be approved in the House. But she added there is “a recognition that there is a foundation of a bill” in the Senate measure.
House Republican Leader John Boehner (Ohio) said, “Our goal is to stop this monstrosity.” He says lawmakers need to “scrap” the current version “and start over and work on the bill in a bipartisan way.”
As lawmakers debate and negotiate these and other bills, they face a tight schedule. With Election Day looming on Nov. 2, the congressional session probably won’t stretch past early October. Some controversial measures won’t be finished; one of those may be climate change.
Moreover, the desire to be re-elected will color how many lawmakers approach pending bills. David Bauer, American Road & Transportation Builders Association senior vice president for government affairs, thinks both parties have a decision to make, saying, “Are we just going to spend the next 10 months trying to produce political ads, or are [we] going to actually try to deliver some results?”
