Shutdown Over – Fiscal Fight Continues

It took an AGC-supported compromise between Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) to break the logjam and bring an end to the government shutdown and stalemate over the debt ceiling.  However, while the Reid-McConnell deal does not address spending or the debt ceiling in the long-term, it does inject a small amount of certainty into our economy and sets the groundwork for addressing our nation’s long-term fiscal challenges. The bill was signed last night by President Obama after it passed the Senate by a vote of 81-18  and the House of Representatives by a vote of 285-144.  All Democrats and 27 Republicans in the Senate voted yes and, in the House, 87 Republicans joined all Democrats in supporting the bill with 144 Republicans voting no. The bill – known as the Continuing Appropriations Act, 2014 – will fund the government at Republican-supported post-sequester levels of $986 billion until Jan. 15, 2014, and will extend the debt ceiling until Feb. 7, 2014.  The only Obamacare-related provision that made it into the package will require the Health and Human Services secretary to certify to Congress that proper income-verification procedures are in place before any subsidies are given out to those who qualify for federal help while buying insurance on the new exchanges. The bill did not make any funding changes to federal construction accounts.  It did, however, contain three provisions impacting AGC members.  The first provision prohibits from starting in FY 2014. The first provision prohibits the start of new direct-federal construction FY 2014 projects that did not receive any funding in FY 2013. The second provision allows the Federal Highway Administration to allocate up to $450 million in Emergency Relief highway appropriations to Colorado for repair of 2013 flooding damage, despite the $100 million per state per incident. The third provision raised the cap on the amount that can be spent on the U.S. Army Corps Olmsted Locks and Dam Project in Illinois to $2.9 billion from $1.56 billion currently.  The measure does not appropriate funds, but allows work on the project to continue.   Without the cap increase, this major public works project would have been shutdown in November. A key component of the Reid-McConnell deal – but not included in the legislation passed last night – was a bipartisan agreement for the House and Senate to go to conference on their respective fiscal year 2014 budgets.  The committee will immediately begin debating top-line spending levels (there is a $90 billion difference between the House and Senate budgets) and then will seek to negotiate long-term solutions to the nation’s fiscal challenges, including ways to responsibly address across-the-board spending cuts known as sequestration. The conference would be required to issue a report by Dec. 13, 2013 (the last scheduled day in the first session of the 113th Congress). If the budget conference committee fails to find common ground on how deal with sequestration, discretionary spending, entitlement programs and revenue, there is the potential for a replay of the past 16 days, as short-term extensions of government funding and the debt limit expire on Jan. 15 and Feb.7, respectively. Unfortunately, precedent is not on the side of success as learned from the last similar panel – the so-called “super committee” of 2011 was deadlocked and adjourned in disagreement, while the Simpson-Bowles Commission on deficit reduction failed to win the support of a super majority of its members and was never embraced by the president. AGC will work closely with the conferees and their staffs on matters that affect our members, including the tax outlook for AGC member companies, solvency of the Highway Trust Fund and increased infrastructure investments. For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org.