Congress took a decisive step Wednesday toward finalizing a $26 billion bill offering aid to states, a surprise win for Dmocrats keen to demonstrate they're taking action on an economy showing signs of weakness.But Wednesday's action, which won the support of two Republicans, suggests members of Congress are sufficiently concerned about the mixed signals from the economy that they're willing to approve narrow spending bills, particularly those with political resonance ahead of this year's midterm elections.
Wednesday's 61-38 vote in the Senate overcame a filibuster and made final passage in the Senate likely as soon as Thursday. House Speaker Nancy Pelosi (D., Calif.) responded by taking the rare move of calling House members back from their summer recess next week to pass the bill and send it to the desk of President Barack Obama...
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Most Republicans opposed the bill. Only Maine's two Republican senators, Olympia Snowe and Susan Collins, joined Democrats in favor.
To win the Maine senators' support, Democrats dropped plans to cut $107 million in funds expected to go largely to Bath Iron Works, a General Dynamics Corp. facility that builds Navy ships in Maine. The Iron Works is one of the biggest private employers in the state with 5,000 workers.
Ms. Snowe said she voted for the bill only because she agreed the potential teacher layoffs constituted an emergency. She also demanded the House return to Washington from its recess to pass the bill.
House members, who often mock the Senate for its slow pace, may feel frustration at being asked to drop their campaigning and return to Washington because of the Senate's action. The Senate is expected to leave the capital at week's end. House leaders, however, concluded the measure was urgent and politically appealing. Congress isn't scheduled to return for a regular session until mid-September, after the school year begins for most students.
The last time the House returned from a recess was 2008, when lawmakers sought to pass an aid package for the auto industry. Before that, the House came back to Washington in 2005 to deal with the case of Terri Schiavo, a brain-damaged woman whose husband was seeking to remove her feeding tube.
Wednesday's bill includes $10 billion to help states avoid layoffs of teachers, police officers and fire fighters and another $16 billion to help states make their Medicaid payments.
Ethan Harris, head of North American economics at Bank of America/Merrill Lynch in New York, said the bill "is worth maybe a tenth of a percentage point in growth over six months." But it is vital for states, he said, which have "cut all the easy stuff, so they're cutting into much more popular programs."
Adds Mark Zandi, chief economist at Moody's Analytics: "If they didn't get this, the job cutting and tax increases states would have to make over the next six months would put a significant weight on the fragile recovery."
Republicans warned that states were becoming too dependent on federal aid. "For the first time in our history, the federal government is the single largest source of revenue for the states," Senate Minority Leader Mitch McConnell (R., Ky.) said on the Senate floor. "When does it end?
Republicans also complained about the bill's revenue source. The legislation is paid for, in part by imposing new limits on foreign tax credits used by U.S. multinationals to lower the taxes they pay in this country. Republicans said this would drive companies, and jobs, overseas.
For several months now, Georgians for a Healthy Future has been monitoring efforts in the U.S. Senate to extend the enhanced matching rate for Medicaid funds (known as FMAP). Today, by a vote of 61 to 38, the U.S. Senate cleared a crucial procedural hurdle by voting to end debate (known as cloture) on legislation to extend the enhanced FMAP funding for an additional six months, through June 30, 2011. The Senate has scheduled a final vote on this legislation for tomorrow evening.
Though Senators Chambliss and Isakson did not vote in favor of cloture, 61 Senators voted to allow a vote to proceed to provide this critical fiscal relief to states. Also today, the Speaker of the U.S. House of Representatives called House Members back from August Recess to take up the legislation next week.
Georgia had been relying on Congress to pass a six-month continuation of the enhanced matching funds for Medicaid when the Legislature and Governor Perdue approved the FY 2011 budget, which runs from July 1, 2010 through June 30, 2011. Despite having built this assumption into our state's budget, the enhanced funds had been set to expire on December 31, 2010. The six-month extension contained in this legislation will extend the enhanced funding to states until the end of Georgia's fiscal year, bringing in an estimated $375 million in federal dollars to our state.
Without the enhanced FMAP, Georgia may have to make cuts to essential health care services for our most vulnerable families or cut reimbursement rates to providers, potentially limiting access to care and further harming our state's fragile economy. In these difficult economic times, more Georgians are in need of safety net programs such as Medicaid and PeachCare. This funding extension will ensure, at least temporarily, that the state can continue to meet these most basic needs. While there is still much work ahead, today's vote is a small victory worth celebrating.
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