Midterm elections are less than a week away, and the items awaiting Congress when they return to Washington are piling up. This session of Congress, referred to as the “lame duck” session, occurs whenever one Congress meets after its successor is elected, but before the successor’s term begins. Here is a quick-and-easy guide to a few major issues impacting young adults that you should see discussed before the 112th Congress begins on January 3, 2011.

The things Congress will pay attention to:

• Pass some sort of FY 2011 appropriations bill
• Reauthorize Temporary Assistance for Needy Families (TANF)
• Address the Pell Grant shortfalls
• Vote on major tax legislation (the Bush Tax Cuts)
• Potentially provide for extensions of  American Recovery and Reinvestment Act programs
  
  

Appropriations – The Continuing Resolution 

Every year Congress enacts 12 appropriations (spending) bills. Those bills are the subject of vigorous fights about spending priorities because much of what we consider to be the “federal government” is funded annually through these bills.

The process, which officially begins in February when the President makes a formal budget request, is supposed to be completed by the beginning of the following federal fiscal year, on October 1st.  Congress is also supposed to vote on its own budget to govern the appropriations process – but it failed to do so this year. Congress can still pass appropriation bills, although it can take a long time to agree on some of the more controversial spending. When this happens, Congress passes a Continuing Resolution (CR).  CRs are special types of spending legislation that fund existing programs.

Because Congress didn’t pass any of this year’s 12 spending bills (that account for about one-third of the government’s funding) by September 30th, a CR had to be passed to keep the government from being shut down. While certain pieces of the remaining spending bill were eventually passed, the process was delayed significantly. Now several issues that greatly impact young adults and the nation are up in the air.

The CR that passed hours before the beginning of the new fiscal year extended last year’s spending decisions until December 3rd at a total cost of $219 billion dollars.  While there were some changes, such as an additional $500 million to replenish the Temporary Assistance for Needy Families Contingency Fund (TANF CF), program funding remained the same.  As a result there are several programs still waiting for funding that provide desparately needed services during these harsh economic times.

Pell Grants

Because this CR is maintaining last year’s spending levels, the Pell Grant program, a federal program that helps low-income students pay for college, will not be able to give students the help they need.  Its estimated that there will a $5.7 billion shortfall for the 2011-12 academic year. The Committee for Education Funding has stated that almost 9 million students would face a cut of more than 15 percent in their maximum award. We will see if Congress will take some action on addressing this shortfall.

Temporary Assistance for Needy Families (TANF)

The TANF block grant, a main component of our federal social safety net, gives states the flexibility to spend funds, within limits, on assisting low-income families and children. A temporary extension was included with the CR, but another extension will be needed when this CR expires on December 3rd.

The “Bush Tax Cuts”

While not related to the CR, activity in Congress right before the recent recess revolved around the pending expiration of the Bush 2001– 2003 tax cuts.  These laws cut taxes across the board for earned income, long-term capital gains and dividends. The legislation also expanded the child tax credit and made dozens of other changes and adjustments to the tax code, involving exemptions, deductions and the marriage penalty. However, as a result of the cuts, $1.7 trillion was added to the federal deficit between 2001 and 2008.

Due to budget rules, the changes were not allowed to last longer than ten years and are consequently set to expire on December 31st of this year.  Expect a lot of activity on the Hill around which income brackets will continue to receive these cuts.

Expiring Provisions in the American Recovery and Reinvestment Act (ARRA, “stimulus”) 

The current Congress cut taxes by $509 billion, $312 million of which came from the stimulus.  Many of these provisions included in the stimulus were set up to be temporary and are slated to expire, including the American Opportunity Tax Credit (AOTC). The AOTC replaced and improved upon the Hope Opportunity Tax Credit, a credit that assists struggling families pay for college (see last week’s eNews for more information).

The stimulus was not limited to tax cuts and credits. Many other programs were created to alleviate the suffering felt by those struggling during the recession, including young adults.  Two major items already expired and could be addressed by Congress when they return after the midterm elections: 1) the COBRA subsidies for workers that lose their jobs and wish to keep their current health care coverage and, 2) the TANF EF that provided subsidized employment for nearly 250,000 adults and youth.

Additionally, extended unemployment insurance benefits did survive initial rounds of cutbacks, but on November 30th more than one million workers stand to lose their federal unemployment benefits if Congress takes no further action.

We will continue to keep you informed during this Congress’ lame duck session. If you have any questions, just email Questions@YoungInvincibles.org.