Issue: Tax and Entitlement Reform
Action Taken: Just past midnight on October 17, President Obama signed into law H.R.2775, a short-term resolution to the government shutdown that began on the start of the fiscal year on October 1, and the Treasury’s need to borrow money to avoid default.
H.R.2775 mandates a House-Senate conference committee to resolve the differences between the FY 2014 House and Senate spending plans. That conference committee will tackle the longer-term spending and other fiscal issues that will lead to government funding for the balance of FY 2014. The new law requires the conference committee to finish its work by December 13, 2013.
The bill does little beyond funding the government and suspending the debt ceiling into early next year. Despite the GOP demands for changes to the Affordable Care Act (ACA)—demands which caused the impasse that resulted in the government shut-down and the struggle over borrowing authority, there was only one relatively small ACA change in the bill. That change will impose income verification requirements on the process of qualifying for federal subsidies for those who buy their health insurance through exchanges.
The bill also guarantees back pay for the federal workers furloughed between October 1 and October 16, denies a cost-of-living increase for lawmakers in FY 2014, and specifies that should the U.S. again approach the debt limit on February 7, the Treasury can take the “extraordinary measures” (accounting procedures) to extend U.S. borrowing authority for a limited time past the February 7 debt limit date.
Next Steps: Between October 17 and December 13, the House-Senate Budget Conference Committee must:
After the conference committee hammers out a unified Congressional budget and the House and Senate approve it, Congress will have to enact the legislation required to fund the government after January 15, 2014. Lawmakers will also have to work on debt limit increases (or changes), budget-required tax and entitlement reform plans and, potentially, some ACA changes. It is likely the budget committee conference report will include instructions to Congress’ committees of jurisdiction on these issues. The instructions will probably include dates certain by which Congress must act on these measures.
It is likely that modifications to the ACA will also play a key role in the budget-mandated legislation that Congress will work on enacting prior to January 15, 2014. Among these potential modifications is a proposal to change the ACA definition of full-time work from 30 hours/week to 40 hours/week.
The ACA requires employers with more than 50 full-time (or full-time equivalent) workers to offer qualified affordable health insurance to their full-time workers, or pay an assessment.
Failure to agree on a unified budget would mean that Congress would again have to struggle with the government funding and borrowing limit issues that led to the 16-day government shut-down and debt limit crisis.
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