CONGRESSWOMAN ELISE STEFANIK
The House is scheduled to begin consideration of the conference report to H.R. 3326, the Department of Defense Appropriations Act of FY 2010, on Wednesday, December 16, 2009, under a same day rule making three other bills in order. The legislation was originally passed in the House on July 30, 2009, by a vote of 400-30. On October 6, 2009, the Senate passed its version of the bill by a vote of 93-7.
The Conference Report accompanying H.R. 3326 would provide $636 billion in funding for the Department of Defense, including $508.1 billion in regular discretionary appropriations and $128.2 billion in contingency funding for the overseas deployments in Iraq and Afghanistan.
In addition, the bill includes $18 billion in unrelated provisions to extend certain expiring programs, including Unemployment Insurance (UI), COBRA subsidies, the Sustainable Growth Mechanism (SGR), Highway funding, Food Stamps, Flood Insurance programs, the Patriot Act, satellite TV royalty fees, and two SBA loan programs first authorized by the Democrats' "stimulus" bill in February.
Division A-Department of Defense Appropriations for FY 2010
Department of Defense Appropriations in Thousands
H.R. 3326 vs. FY 09
The conference report accompanying H.R. 3326 contains $508 billion in regular discretionary spending for the Department of Defense (DoD), an increase of $21 billion or 4 percent above the non-emergency discretionary spending level for FY 2009 and $3.8 billion below the President's request. In addition to the base level of DoD funding, the conference report includes $128 billion in contingency spending for overseas deployments in Afghanistan and Iraq. When base DoD funding and contingency operations funds are combined, H.R. 3326 totals $636.3 billion, approximately $3.8 billion below the President's request.
The following is a summary of the spending highlights and other provisions in Defense Appropriations Conference Report:
Provides $124.1 billion for military personnel, an increase of $1.8 billion above the House-passed bill and $9.7 billion above FY 2009. The spending provides funds for pay, allowances, clothing, subsistence, gratuities, travel, and related expenses for active duty personnel and the reserve corps.
Military Pay Raise: Provides an average 3.4 percent pay increase for military personnel in Fiscal Year 2010. This is 0.5 percent more than the President's request of 2.9 percent.
Personnel Levels: Provides for personnel levels equal to the President's budget request. The bill would result in a decrease of 2,731 in total end strength for the active forces, from 1.412 million to 1.410 million. The bill would increase the end strength for the selected reserve by 844 above the fiscal year 2009 authorized levels, from 843,656 to 844,500. The total number of military personnel would be 2,254,500, the same as the President's request.
Stop Loss: Provides retroactive pay for military service members whose enlistments were involuntarily extended since September 11, 2001. Service members would retroactively receive $500 for each month their enlistment was extended. The FY 2009 Supplemental Appropriation (H.R. 2346) included $734 million for the same purpose.
Operations and Maintenance
Provides $154.2 billion in discretionary spending for DoD operations and maintenance, an increase of $1.3 billion or less than 1 percent over FY 2009. The funds provide for the costs of operating and maintaining the military, including the reserves and related support activities of the DoD. The operations and maintenance account also provides funding for civilian pay, maintenance, and spare parts for weapons and equipment.
Provides $104.4 billion for military equipment procurement, an increase of $3.3 billion or 3.5 percent over FY 2009.
Aircraft: Authorizes $6.2 billion for 30 F-35 Joint Strike Fighters and $1.5 billion for 18 F/A-18 E/F Super Hornets, including $108 million in unrequested funds for advance procurement for additional Super Hornets to support a multiyear procurement.
Ships: Provides $13.8 billion for the procurement of ten Navy ships, including $1 billion for a Littoral Combat Ship, $1.1 billion for the LPD-17 San Antonio class amphibious ship, and $1.3 billion for the DDG-1000, the Navy's next-generation surface combat ship.
Heavy Tactical Vehicles: Provides $786 million for the Family of Heavy Tactical Vehicles, a decrease of $26 million below the President's request.
Research, Development, Testing, and Evaluation
Provides $80.2 billion for the DoD's research, development, testing, and evaluation (RDTE) efforts, a decrease of $282 million or less than 1 percent from FY 2009.
Small Business Provisions: Includes an additional $80 million for the small business technology insertion program to promote small business participation in the defense industry.
CONTINGENCY OPERATIONS and OVERSEAS DEPLOYMENT
The bill provides $128 billion in contingency funds for overseas deployment and ongoing operations in Iraq and Afghanistan. Overseas contingency funding would provide additional amounts for the same accounts as the base bill, including military personnel, operations and maintenance, procurement and research, with all the funding going directly to overseas operations.
Other Defense PRovisions
Guantanamo Bay Detainees: States that none of the funds in the bill may be used to release a Guantanamo Bay detainee in the U.S. The bill also states that none of the funds may be used to transfer a Guantanamo Bay detainee into the U.S. until 45 days after the President submits a plan to Congress which includes:
• Any risk to national security posed by transferring the detainee to the U.S.
• The cost of not transferring the detainee.
• The legal rational for the transfer.
• A certification by the President that any risk has been mitigated.
• A certification by the President that the Governor or Legislature in the State where the detainee is being transferred was notified at least 30 days prior to the transfer.
While the legislation does not contain specific funding requested by the President for the transfer of Guantanamo detainees, Members may be concerned that this language is insufficient to prevent the Administration from transporting Guantanamo detainees to the U.S. for trial or incarceration 45 days after a plan is submitted.
Permanent Bases: Prohibits funds in the bill from being used to establish permanent bases in Iraq or Afghanistan or to exercise U.S. control over oil in Iraq.
Torture: Prohibits funds in the bill from being used for any purpose that violates the United Nations Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment.
Competitive Bidding Ban: Prohibits the Bureau of Prisons from using any funds to enter into a public/private contact under the OMB Circular A-76, which requires private contractors to compete for federal money to ensure that the U.S. receives maximum value for tax dollars.
DIVISION B--OTHER MATTERS
The conference report provides $18.5 billion in "emergency" funding and revenue reductions to extend a number of expiring increases in program funding for two months, through February 28, 2009.
Food Stamps: Extends the increased benefits for the Supplemental Nutrition Assistance Program (SNAP) included in the Democrats stimulus. The conference report authorizes "such sums" as necessary to provide the additional benefit and $400 million for States to administer the program that will remain available until September 30, 2011. According to CBO, this provision would cost $400 million over five years.
Satellite Home Viewer Reauthorization: Includes a two month extension (through February 28, 2010) of a current law that would otherwise expire on December 31, 2009, which permits satellite television providers to retransmit certain network programming to subscribers. This would allow households that subscribe to various satellite television services to continue to view network broadcasts. According to CBO, this provision would cost $3 million and increase revenues by $3 million.
Patriot Act Reauthorization: The conference report reauthorizes three provisions of the PATRIOT Act that are set to expire at the end of December 2009 for 2 months, through February 28, 2010. The USA PATRIOT Improvement and Reauthorization Act of 2005 made permanent 14 of the 16 provisions from the original PATRIOT Act. The 2005 bill extended the sunset on Section 206 FISA roving wiretaps, Section 215 FISA business records, and section 6001 of the Intelligence Reform and Terrorism Prevention Act (IRTPA).
• The So-Called "Library Provision" (Section 215 of the PATRIOT Act): This provision allows the FBI to apply to the FISA court for an order granting access to tangible items-including books, records, papers, and other documents-in foreign intelligence, international terrorism and clandestine intelligence cases. In order to ensure protection against abuses of Section 215 authority, the USA PATRIOT Reauthorization Act of 2005 contains several conditions including Congressional oversight, procedural protections, application requirements and a judicial review process. Several of the 9-11 terrorists used public computers to review their September 11 plane tickets.
• Roving Wiretaps Provision (Section 206 of the PATRIOT Act): This provision authorizes U.S. Foreign Intelligence Surveillance court (FISA) orders for multipoint or "roving" wiretaps for foreign intelligence investigations. A "roving" wiretap applies to an individual and allows the government to use a single wiretap order to cover any communications device that the suspect uses or may use. This type of wiretap differs from a traditional criminal wiretap that only applies to a particular phone or computer used by a target. Without roving wiretap authority, investigators would be forced to seek a new court order each time they need to change the location, phone or computer that needs to be monitored. Terrorists and foreign spies use multiple communications devices to evade detection.
• "Lone Wolf" Provision (Section 6001 of Intelligence Reform Act): This provision amends the definition of "agent of a foreign power" to include individual foreign terrorists who may not be directly affiliated with a foreign power or international terrorist organization. Under this provision, terrorists who work on their own cannot escape surveillance simply because they are not agents of a foreign power or avowed members of an international terrorist group. Examples of "lone wolf" terrorists are Richard Reid (the "Shoe-Bomber"), Timothy McVeigh, Ted Kaczynski-however, this doesn't apply to them because they are US citizens. This provision ONLY applies to foreign terrorists or agents of a foreign power.
A long-term reauthorization of these three provisions would likely occur sometime in 2010.
SBA Loans Fee Waiver Extension: Includes $125 million for continuation of reduced fees for Small Business Administration (SBA) 7(a) loans and extends their authorization through February 28, 2010. The "stimulus" bill gave the SBA $375 million to increase its guarantee on 7(a) loans and to reduce or eliminate fees on both its 7(a) loans. These funds included in the "stimulus" bill have run out. The 7(a) Loan Program is the SBA's primary program to help start-up and existing small businesses obtain financing when they might not be eligible for business loans through private lending channels. SBA itself does not make the loans, but rather guarantees a portion of loans made and administered by commercial lending institutions. Participating lenders agree to structure loans according to SBA's requirements, and apply and receive a guaranty from SBA on a portion of this loan. According to CBO, this provision would cost $125 million.
Extension of Highway Trust Fund: The conference report would extend federal highway and surface transportation programs and authorize the appropriation of funding from the Highway Trust Fund (HTF) for two months, through February 28, 2010, or until a multiyear law reauthorizing the federal highway program is enacted. The existing federal transportation programs and spending authority under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU) will expire on December 31, 2009.
The HTF was established in 1956 for the purpose of funding the construction of an interstate highway system. The account is administered by the Federal Highway Administration, within the Department of Transportation, and distributes about $33 billion of gasoline tax revenues annually to States for highway projects. Eighty-eight percent of total receipts for the HTF come from the federal highway users excise tax (the remainder comes from truck-related taxes such as truck and trailer sales, truck tires and heavy-vehicle use taxes). Currently the 18.4-cent federal gasoline tax is distributed with one-tenth of one cent to the Leaking Underground Storage Tank Trust Fund and the rest to the Highway Trust Fund's two accounts: 2.85 cents per gallon to fund the mass transit account, and 15.44 cents per gallon to fund the highway account.
Extension of "Stimulus" Unemployment Provisions: Extends the nationalization of the extended benefit unemployment program through February 2010, at a cost of $11.3 billion, and further designates such spending as "emergency spending" exempt from PAYGO compliance. However, given that the bill would use entirely federal funds to extend unemployment benefits in many States for a period totaling over two full years, some Members may echo the concerns of noted economist Martin Feldstein, who previously testified that extended unemployment would "create undesirable incentives for individuals to delay returning to work. That would lower earnings and total spending."
During economic downturns, Congress has acted to extend unemployment benefits beyond the statutory requirement of 26 weeks. Last year's wartime supplemental (P.L. 110-252) provided a new program of extended unemployment compensation benefits for up to 13 weeks (39 weeks total). Legislation signed by President Bush in November 2008 (P.L. 110-449) extended the period of extended unemployment compensation from 13 to 20 weeks (46 weeks total), with an additional 13 weeks (59 weeks total) available in high unemployment States. Legislation passed by Congress in October (P.L. 111-92) extended unemployment benefits for 14 weeks for all individuals (73 weeks total), with an additional six week extension (79 weeks total) for individuals in States with total unemployment rates above 8.5 percent. According to the Department of Labor, 38 States and the District of Columbia qualify as "high unemployment" States for purposes of the additional weeks of unemployment compensation as of December 13, 2009.
In addition, the "stimulus" bill, in addition to shifting the financing for extended unemployment compensation benefits to the Treasury (as opposed to the Unemployment Trust Fund), and increasing all unemployment benefits by $25 per week through the end of 2009, effectively nationalized for the first time the Federal/State extended benefit program authorized in permanent law. That program has since its inception in the 1970s paid extended benefits in high unemployment States using 50 percent State funds. Extended benefits last up to 20 weeks, meaning the total maximum duration of 100 percent federally funded extended benefits today is a record 73 weeks-up to 53 weeks under the "temporary" program and another 20 weeks under the "permanent" program, which is currently entirely federally funded. Thus unemployed workers can receive a total of 73 weeks of federal benefits, or 99 weeks (counting 26 weeks of State unemployment benefits) available nationwide-with a total of 105 weeks available in high unemployment states.
Extension of "Stimulus" COBRA Premium Subsidy: Extend the length of the "stimulus" subsidy program from nine to 15 months. The bill would also make employees losing their jobs from January 1, 2010 through February 28, 2010, also eligible for the 15 months of COBRA subsidies. The bill also makes technical changes to the program regarding the retroactive enrollment of certain individuals once qualified for subsidies.
Provisions of the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) provide for separated employees and their dependents to remain on their previous employer's group policy for 18 months, or up to 36 months in some cases. Employers are permitted to charge former workers electing COBRA coverage the full cost of their group insurance premiums, plus a 2 percent fee to cover administrative costs. The "stimulus" (P.L. 111-5) provided a 65 percent premium subsidy to employers to cover the costs of individuals electing COBRA coverage for up to nine months, provided such election came as a result of the individual's involuntary termination from employment during the period from September 1, 2008 to December 31, 2009. Under the "stimulus", subsidies continue for a maximum of nine months, but terminate once the individual becomes eligible for other employer-based coverage or Medicare. Subsidies begin to phase out for individuals with adjusted gross incomes over $125,000 and families with incomes over $250,000, phasing out completely at income levels of $145,000 and $290,000, respectively.
According to CBO, this provision would cost the federal government $6.2 billion million in reduced revenue over five and ten years, as the subsidy would be paid to employers in the form of a reduction or rebate of taxes (both income and payroll) withheld. The bill specifies that these provisions should be considered "emergency spending," meaning that PAYGO rules would not apply. CBO also estimates that the bill would increase spending by $260 million.
Some Members may view this further extension of health insurance subsidies-again, totally unpaid-for-as part of an attempt to circumvent the President's promise that his health "reform" bill will cost "only" $900 billion, and will not increase the deficit. If Democrats hope to extend provisions like the COBRA subsidies piecemeal through 2013 or 2014-when the major provisions of their "reform" bills will finally take effect-such efforts would cost several hundred billion dollars-yet the majority has made no attempt to offset the costs of such a federal spending binge.
Medicare Sustainable Growth Rate: The bill provides for a two-month adjustment to the Sustainable Growth Rate (SGR) conversion factor for physician payments. Specifically, the bill provides for a zero percent update for the period from January 1, 2010 through February 28, 2010. The bill further provides that the adjustments made for this period will be disregarded for the purposes of determining the conversion factor for 2010 and future years, resulting in at least a 21 percent reduction in physician payments beginning in March 2010. The bill funds this two-month adjustment through transfers from the Medicare Improvement Fund, which was created in part for such a purpose.
Poverty Guidelines: Extends the expanded Health and Human Services poverty guidelines through March 1, 2010, to ensure that eligibility for certain means-tested benefits will not be reduced because of new poverty guidelines for at least two months. According to CBO, this provision will cost $20 million.
Flood Insurance: Extends the National Flood Insurance Program through February 28, 2010.
Digital-to-Analog Coupons: Rescinds $128 million in unused coupons from the Digital-to-Analog Converter Box Program. According to CBO, this provision will increase revenue by $128 million.
Division A of the underlying the legislation, the Defense Appropriations Act of FY 2010, would appropriate $636.3 billion in funding for FY 2010.
According to CBO, Division B of the legislation would cost $12.2 billion and reduce revenue by $6.4 billion over ten years. Thus, Division B would have the net effect of increasing the deficit by $18.5 billion.