House Set to Vote on Debt Limit Increase

The House of Representatives will vote this evening on Speaker John Boehner’s deficit reduction plan, the Budget Control Act of 2010.  It is anticipated that most House Republicans will vote for the Speaker’s bill (although passage is not certain), even though it is still unclear how the debt-ceiling game will play out. Passage of the Budget Control Act in the Senate is unlikely.  Yesterday, all 53 members of the Senate Democratic Caucus signed a letter in opposition to the Boehner bill; making it all but certain that the bill will not get the 60 votes necessary to move the bill.  In addition, Senator Harry Reid said this afternoon that the Senate will take up the Boehner bill if it passes the House.  Reid guaranteed the bill would subsequently fail.  There is, however, some hope in the Senate, as reports that Senate Majority Leader Harry Reid (D-NV) – who has released his own deficit reduction plan – and Minority Leader Mitch McConnell (R-KY) have had discussions on developing a path to a debt limit increase that can get bipartisan support and the 60 votes necessary for passage in the Senate.  At this point, it appears Majority Leader Reid has two options: the first would be to amend the Boehner bill; the second would be to move his own bill, which offers $2.7 trillion in spending cuts over 10 years, and send that back to the House.  However, both bills would face an uncertain fate. Boehner/Reid Plans For as much as the Boehner and Reid plans closely resemble each other, there is serious divide over the Republican demand for a second debt limit vote tied to another $1.8 trillion in budget cuts that likely would come up early next year.  The House bill also includes a provision to force a Balanced Budget Amendment vote, which has no chance of passing the Senate.  The Reid plan would extend the debt ceiling until 2013, while making a similar amount of cuts as the Boehner bill. The key similarities of the plans are: instituting new statutory caps on discretionary spending for each of the next ten fiscal years; increasing the debt ceiling immediately upon enactment – a $2.7 trillion increase in the Reid bill and $2.5 trillion gradual increase in the House bill; and the creation of an Identical Joint Select Committee on Deficit Reduction which will report proposed legislation for further deficit cuts by December 2, 2011. Impact on Construction Industry There are no specific cuts in either the Reid or Boehner plan.  What they do instead is put a cap on total federal spending including federal construction spending.  So cuts to total spending  will most assuredly impact the majority of federal construction accounts.  For example, in the FY 2011 Continuing Resolution (link to either CLWIR story or one-pager on cuts) construction accounted for more than half of the total cuts.  In order to avoid a similar outcome as a result of the deficit reduction plans, AGC has communicated with congressional leadership about the impact the cuts in FY 2011 will have on our industry. From a transportation perspective, one thing the Boehner and Reid bills have in common is that they create new discretionary spending caps that do not have separate categories for highway and transit spending, further eroding the Highway Trust Fund firewalls. As we approach the August 2 deadline, it appears that the House and Senate may be moving closer to resolving the debt ceiling increase.  However, ultimate outcome remains uncertain.  AGC will continue to monitor the budget debate and continue to advocate for the fair treatment of the construction industry in that debate. For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org.