Threat of Government Shutdown Looms as Debt Ceiling Fight Continues
Washington Update
Budget/Appropriations
On Monday, September 20, the House returned from recess to begin the critical work on government funding for FY22, which runs out on October 1. The issue of the debt ceiling, however, could complicate efforts to pass the necessary stopgap funding measure to avert a government shutdown. The House Rules Committee is meeting today to prepare a continuing resolution that would fund agencies until late November or early December and Democrats are looking to attach a provision to raise the nation’s $28.5 trillion borrowing limit, which will be reached next month. Senate Minority Leader Mitch McConnell (KY) has repeatedly said that Republicans will not vote to increase the debt ceiling, arguing Democrats are in control of Congress and the White House and should take responsibility for any new borrowing. In an op-ed for The Wall Street Journal published this weekend, Treasure Secretary Janet Yellen warned that failing to raise the debt ceiling would “produce widespread economic catastrophe.” Congress has not sent President Biden any FY22 appropriations bills. The Senate Appropriations Committee planned to advance more spending bills this week but markups were canceled because the parties have been unable to agree on funding levels.
Free Community College
In 2015, President Barack Obama first introduced the idea of free community college and since then many states have passed their own free college programs, but now Democrats are even closer to accomplishing that long-promised goal. Free community college has been a priority of President Biden as reflected in his social spending package, which Democrats hope to pass through reconciliation this fall with funding to create a national free community college program.
In the House Democratic plan, billions of dollars would be allocated to states each year using a formula initially based on the nationwide median of tuition and fees at community colleges. That per-student funding amount would then increase with inflation but by no more than 3 percent each year. In exchange for that funding, states would have to agree to eliminate tuition and fees for in-state students at their community colleges. Additionally, states would have to allow all residents, regardless of immigration status, to access the benefit, and would be prohibited from imposing any additional eligibility criteria. The first year the federal government would pay 100 percent of the median per-student funding amount but states would have to pick up 5 percent of that amount in the next year. That number would progressively increase by 5 percentage points in the following years. Those state contributions would be automatically slashed in the event of an economic downturn.
The federal program would be funded through mandatory spending, eliminating the need for Congress to approve funding for it each year. House Democrats’ proposal calls for authorizing the free community college program for five years and estimates that the cost would be $45.5 billion while President Biden’s initial plan had called for $109 billion over 10 years. House Democrats could still make changes to the plan as it goes to the Budget Committee and then Rules Committee in the coming weeks, though major overhauls are unlikely. In the Senate, though, Democrats are still negotiating over how to allocate funding to various programs, and senators could wind up changing the overall cost of the community college program by increasing or decreasing the number of years it lasts.
H-1B Visas
On Wednesday, September 15, a federal court vacated a Trump administration rule that would have prioritized H-1B visas for employers who offer the highest-paid positions, ruling that former acting Homeland Security Secretary Chad Wolf was improperly appointed and did not have the authority to issue the regulation. The lawsuit, brought by the U.S. Chamber of Commerce, the National Association of Manufacturers and others in the Northern District of California, argued that the Trump administration failed to properly seek public input on the rule, that it conflicted with the Immigration and Nationality Act and that Wolf didn’t have the authority to issue it.
The Department of Homeland Security makes 65,000 H-1B visas available annually for high-skilled or specialty positions, plus an additional 20,000 visas for workers who have earned a U.S. master’s degree or higher. The demand for workers typically exceeds the 85,000-visa total, which triggers a lottery system. The Trump administration rule, issued in January, would have scrapped the lottery and instead prioritized employers offering the highest-paid positions. The rule was supposed to go into effect in March but was delayed by the Biden administration until December.
Department of Education
On Tuesday, September 14, on a vote of 58-37 the Senate confirmed James Kvaal as the undersecretary of education, which is the number 3 position at the Department of Education. He will play a pivotal role in executing the Biden administration’s higher education and student aid agenda. Kvaal previously was a top education adviser in the Obama White House and more recently led The Institute for College Access and Success. Nominated by President Biden back in February, Senator Elizabeth Warren (MA) held up Kvaal’s swift nomination for months as she negotiated with the Biden administration over changes she said she wants to see for how the department manages its student loan portfolio. Warren lifted her hold on the nomination just before the August recess, citing “substantial reforms” to the federal student loan program that she said the administration had committed to adopt.
Initial Jobless Claims
In the week ending September 11, the advance figure for seasonally adjusted initial claims was 332,000, an increase of 20,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 310,000 to 312,000. The 4-week moving average was 335,750, a decrease of 4,250 from the previous week's revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week's average was revised up by 500 from 339,500 to 340,000. The advance seasonally adjusted insured unemployment rate was 1.9 percent for the week ending September 4, a decrease of 0.2 percentage point from the previous week's revised rate.
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