President Bush signed into law today a $257 billion supplemental spending package that will fund the wars in Iraq and Afghanistan several months into the next president's term and a host of domestic programs. Bush's signature on the bill comes days after the Senate passed the measure Thursday night.

The package appropriates some $162 billion dollars for the wars; $62.8 billion for an expanded GI bill; $8.2 billion for a 13-week unemployment insurance benefit extension; and a bevy of other domestic discretionary spending provisions.

Happy Fourth of July!
Just wanted to let our loyal BudgetBlog readers know we're going on a short hiatus next week. With Congress heading out of town for a short summer recess and the upcoming Fourth of July holiday next week, the Fiscal Policy team is heading out of town in order to escape the heat for some well-deserved vacation. This means, though, that the BudgetBlog will be dormant next week.

But don't despair. Craig and I will return in one short week on July 7 to continue to bring you all the news, gossip, information, and analysis on federal fiscal policy you've come to expect.

Hope everyone has a safe and festive Independence Day next week - be careful with those fireworks.

It's the end of June, and the temperature is climbing in the District. And I think it's starting to affect the work of our elected leaders.

The House Appropriations Committee abruptly adjourned in chaos Thursday before acting on two big domestic spending bills, after Republicans tried to force the committee to take up a bill covering the Interior Department they believe could be used to lower fuel prices.

...

Tension began soon after the committee began meeting, when Jerry Lewis of California, the panel's senior Republican, asked Obey to give his word that he would bring the Interior spending bill up for a vote the week Congress returns from its July Fourth recess.

Obey declined, and lectured Lewis. "If the gentleman wants to set the agenda of the committee, he needs to go out and get 30 Republicans elected," he said. [This bit does not appear in the free CQ version of the story, but it is on their pay site here - ed. ]

Lewis stood and offered an amendment to strip the text from the Labor-HHS-Education bill and replace it with the Interior spending bill.

When John E. Peterson , R-Pa., tried to offer an amendment to Lewis' amendment, Rep. Norm Dicks , D-Wash., made a motion to adjourn.

Later, Obey spokeswoman issued the following statement:

"It should come as no surprise to anybody that Dave Obey has no patience for B.S.

"Yesterday, Obey announced to the committee that the Interior Appropriations bill was scheduled to be marked up in full committee on July 9th, giving folks a real debate and real votes on issues in that bill."

"Today's plan by republicans to tie the committee in knots with a series of unrelated amendments was just another political stunt, the kind the American people have come to despise. It is B.S. and Obey won't put up with it."

Another report of a questionable use of outsourcing appeared today in CongressDaily, this time it's happening over at the State Department. Seems folks over there have modified an existing contract to Computer Sciences Corporation (FedSpending.org profile) to "collect visa information and fingerprints of Mexicans applying for new border crossing cards." The non-competed contract has raised some eyebrows in Congress and among government watchdogs, particularly the Government Accountability Office (GAO).

A State Department official testified before the House Oversight and Government Reform Government Management Subcommittee that the contract is just a test program and that the department hopes to initiate a formal competition before the end of the year. But it looks as though that "test program" is just an attempt by the State Department to assess the usefulness of the contract cover their behinds. GAO has not had time to assess the new contracted out work and what impact it will have, and surprise, surprise, neither has the State Department. GAO testified at the same hearing that the State Department has "not developed metrics to measure the success and efficiency of the test program."

So, the State Department is going to determine whether this is a good idea or not by...wait, how are they going to figure that out? Most likely, they have already concluded this outsourcing should happen. My bet is that the test program will lead to a contract for a full program, that Computer Sciences Corp. will undoubtably win, regardless of whether this really is a good deal for taxpayers or might compromise privacy or national security. No worries though - those are just minor details that will unfortunately remain unknown. Sigh...

Looks like reforms that would bring increased transparency to earmarking in the U.S. Senate will have to wait a little longer. The Senate Republican caucus postponed a vote yesterday on a package of recommendations developed by five GOP senators earlier this year that would increase disclosure of earmark requests and accessibility of earmark language in legislation. The Hill reports:

The conference was scheduled Wednesday to vote on reforms that were first proposed in April by a GOP task force to make the process of inserting pet projects into appropriations bills more transparent. But due to the heavy business awaiting Senate action before the Fourth of July recess, and since some members wanted more time to review the recommendations, the meeting was delayed until next month at the earliest.

The earmark reform debate continues to divide the GOP caucus as Republican appropriators have voiced concerns about some of the reforms proposed by the five-member task force. Indeed many believe the delayed vote was not due to the main reason cited in press reports - a heavy legislative calendar - but because Senate Minority Leader Mitch McConnell (R-KY) is an appropriator and is particularly sensitive to reforms that would curb earmarking.

Even if the GOP adopts the recommendations as written, it will still require a Senate rule change to implement some of the reforms, such as requiring that earmark language appear in the text of legislation and not in accompanying bill reports. It is nice to see transparency reforms continue in the debate in Congress, and people like Sens. Jim DeMint (R-SC) and Tom Coburn (R-OK) should be commended for keeping this issue alive. But increasing access to information about earmarking should really be done in a comprehensive way that links earmark information with bill text and background materials and other online information about Congress. This system should be put online in a central place, be searchable, downloadable, and easily understood by average citizens, and the information must be available before Congress considers legislation - not after.

Following up on my blog earlier today about the Webb-McCaskill Wartime Contracting Commission finally starting to get off the ground, I came across a great column by Thomas Frank today in the Wall Street Journal (of all places!) continuing the drumbeat for a contracting commission to finally get to the bottom of the rampant shenanigans that have gone on for far too long in Washington.

Frank, who wrote a cultural analysis of American politics in the book "What's the Matter With Kansas?", briefly explores the original of the privatization movement in the U.S. in his latest edition of his column entitled "The Tilting Yard," and calls on conservatives (of all people) to help turn the tide of waste, fraud, and abuse in federal procurement. Frank concludes:

The days when conservatives railed against red tape and shrieked for efficiency in Washington now seem like a lifetime ago. When they finally got the opportunity to put their theory into practice, conservatives contrived instead one of the most wasteful systems ever seen.

It is time for a new Grace Commission, this one examining the sordid history of privatization in all its details.

Frank's column is worth a read: The Tilting Yard: Conservatives and Their Carnival of Fraud

By a voice vote, a Senate appropriations subcommittee has approved a FY 2009 Labor-HHS-Education funding bill. The measure would provide about $400 billion less than the House version but bests the president's request by over $7 billion. The bill includes a $1.1 billion boost to NIH and would increase college education funding by $2.7 billion.

Yesterday evening (Thurs.), the House approved a pair of amendments to the war supplemental spending bill that would found the wars in Iraq and Afghanistan and would provide funding for exetended unemployment benefits, expanded GI bill benefits, and a host other domestic spending provisions.

By a vote of 268-155, the House approved $161.8 billion in war funding. And by a vote of 416-12, it approved some $92 billion in domestic spending.

The package has been sent to the Senate, where it will be considered sometime next week. The president has expressed support for the bill and will likely sign it when it reaches his desk.

The following table comes from the House Appropriations Committee press release:

(Updated below)

By cancelling approps markups this week, House Majority Leader Steny Hoyer (D-MD) has cleared the deck for floor consideration of that chamber's latest revision of the war supplemental spending package. With the exception of additional funds for midwest region's recent flooding disaster (speculation is $2 billion-ish), the House bill is shaping up to look pretty much like the original sent to the Senate oh-so-long ago:

• Fulfillment of the remaining war funding request for FY 2008 and part of FY 2009
• 13 weeks of extended unemployment insurance benefits, with an another 13 weeks for those living in "high-unemployment" states (for a total of 26 weeks).
• $52 billion expansion of the G.I. bill
• A smattering of other domestic spending

Although House Blue Dogs talked Democratic leadership into including a tax provision to offset a $52 billion expansion of the G.I. bill, "Democratic aids" say that if the Senate ultimately strips the bill of the revenue raiser, they won't stand in the way of final passage in the House. Observers will recall that the first war supp included such an offset, and that the Senate voted on and rejected said offset. Baffling to me, then, is why the insistence on repeating the process only to announce that support for the offset in the House will totally collapse upon Senate rejection.

UPDATE: House Democratic leadership have announced they have reached a compromise with the White House.

• Fulfillment of the remaining war funding request for FY 2008 and part of FY 2009
• 13 weeks of extended unemployment insurance benefits for all states: There will be not additional 13 week extension for high-unemployment states.
• $52 billion expansion of the G.I. bill that will not be offset with a 0.5% millionaire surtax
• $2.65 billion for midwest flood relief
• Postponement of six new Medicaid regulations implemented by the Bush Administration (postponement of the a seventh regulation passed the House independently in April)

The House Appropriations Financial Services Subcommittee approved, by voice vote, a $22.4 billion bill that would provide funds for the Treasury Department and the District of Columbia. Included in the measure is $11.4 billion for the IRS, a slight increase over the president's request and over $300 million more than the current budget. And while the IRS' enforcement budget allotment matches the president's request -- a respectable 7 percent increase over current levels --, the committee saw fit to raise Bush's $2.15 billion request for taxpayer services funding by $60 million.

The subcommittee also zeroed out funding for the IRS' private debt collection. The controversial move will likely raise the ire of supporters of the program, and if history repeats itself, the program will see funding restored if Congress passes a continuing resolution for FY 2009 later this year.

Here's the approps scorecard thus far:

The House Appropriations Committee has released its 302(b) allocations.

And, Sen. Robert Byrd (D-WV) has announced his "intention to complete Full Committee action on all of the 12 appropriations bills by the end of July." The press release also indicates that that subcommittee markups are to begin the week of June 16, starting with Commerce, Justice, Science and Homeland Security on June 18.

Also, three approps subcommittees in the House have wrapped up their work. Here's the current situation:

With the bicameral adoption of a budget resolution last week, Congress embarks on the long, strange trip known as "the appropriations process."

Occasionally, we'll update this chart to let you know where everything stands.

Or, you can also follow all the appropriations action on the Thomas "Status of Appropriations Legislation for Fiscal Year 2009" website.

Would that it were easy to answer this one. As you might imagine, the answer is: it depends.

PRO: PAYGO applies to an extension of unemployment insurance (UI) benefits because there would be -- without an offset -- a net increase of the deficit at the end of the day. Like other trust funds (think Social Security), there is no actual money there, just IOUs.

CON: But in the case of the UI trust fund, there is plenty of money in the account -- it's $35 billion in the black and the proposed legislation would cost roughly $12 billion over ten years.

ANSWER: the current ($35 bn. surplus) condition of the Federal Unemployment Tax Act (FUTA) trust fund has no bearing on the question. More directly relevant is whether the proposed UI extension is adopted as part of the emergency supplemental war spending appropriation (as it was in the Senate), or as a stand-alone bill. If the former, technically mandatory spending is not subject to PAYGO on an emergency supplemental appropriations bill; if the latter, the stand-alone, without offsets, would be subject to a (waivable) point of order under the rules of PAYGO.

Congress has sent the president a bill that would, in addition to forcing free-riding federal contractors to pay payroll taxes, "allow soldiers receiving combat pay to have their money counted as income for the purposes of the Earned Income Tax Credit." (BNA email)

I realize that we blow a lot of cash on the military, but does it strike anyone as odd that some Americans getting shot at in a combat zone in service of their country are paid so little that they qualify for EITC?

As Dana noted in this morning's daily report, the unemployment numbers released this morning were bad enough to put unemployment insurance (UI) benefits extension back in play for the domestic spending section of the FY 08-09 war supp.

But the past couple of weeks have seen the release of a couple of other data points that should increase concern among lawmakers that the U.S. labor force has come into sour times.

• The number of continuing UI claims -- workers receiving UI benefits for more than one week -- has not been this high since March 2004. The number of continuing claims has been sharply increasing since Nov. 2007.

(click to enlarge)

• On Wed. (June 4), the Dept. of Labor reported that productivity in the first quarter was increasing at an annualized rate of 2.6% -- a healthy number. But that number -- the economic output per unit of labor -- is the result of employers scaling back hours, making workers worse off.

It should also be noted that May's 49,000 net job loss was buoyed by the addition of 17,000 government jobs; the private sector lost 66,000 jobs, continuing a six-month decline in private jobs.

(click to enlarge)

The good folks over at the Congressional Budget Office (CBO) released their monthly budget review yesterday. Some highlights of the number crunching in the report are below:

The federal government incurred a deficit of about $317 billion during the first eight months of fiscal year 2008, CBO estimates, $168 billion more than the shortfall recorded through May of last year. About $50 billion of that change is due to the distribution to individuals of the tax rebates enacted in the Economic Stimulus Act of 2008. That amount is just under half of the total rebates expected for this year; most of the remainder will be disbursed during the next two months.

...

CBO estimates that the federal government recorded a deficit of $165 billion in May, about $97 billion more than the deficit recorded in May 2007. About half of that increase was due to rebate payments, which are recorded as either reductions in revenues or increases in outlays. (When a rebate exceeds an individual's federal income tax payment, the excess is classified as an outlay in the budget.)

...

Outlays were $174 billion higher than in the October-May period last year, far outpacing the $6 billion growth in net revenues...

The broad category of other programs and activities accounted for almost half of the increase in outlays through May. Spending for that category was up by 12.6 percent on an adjusted basis, reflecting an estimated $19 billion in rebate payments as well as double-digit growth in outlays for refundable tax credits, veterans' health programs, unemployment benefits, and food and nutrition services. Defense outlays have also grown rapidly in recent months, rising by 10 percent through May, compared with 7 percent in fiscal year 2007. Much of the growth this year has been driven by a 14 percent increase in spending for military operations, maintenance, and procurement, well above last year's average gain of 8 percent for those activities.

CBO: Monthly Budget Review

By a vote of 214-210, the House has approved a spending plan for FY 2009. The $3 trillion budget, adopted by the Senate yesterday, includes $1.013 trillion in discretionary spending and is the first budget to be passed in an election year since 2000.

Below are blog and news stories discussing the introduction yesterday of a new transparency bill cosponsored by Sens. Barack Obama (D-IL) and Tom Coburn (R-OK). Given the bill was introduced at the same time as Obama was wrapping up the Democratic nomination for president, the coverage was not bad.

The bill will likely be marked up in Sen. Carper's (D-DE) subcommittee of the Homeland Security and Governmental Affairs Committee sometime in the next few weeks and then hopefully move to the floor before the August recess. Sen. McCain (R-AZ) joined this bill shortly before it was introduced as an original cosponsor, dramatically increasing the chance of it passing this year before election year pressures impose gridlock in Congress. Perhaps Obama and McCain will promote the bill in their potential series of town hall meetings - that would definitely give it a boost in Congress.

The Hill: Rivals Obama and McCain work together behind scenes
Sunlight Foundation: USASpending.gov 2.0
OMB Watch: Obama-Coburn Continue Transparency March
POGO: Obama for...Transparency
Chicago Tribune: Obama, McCain agree on transparency
CongressDaily: Obama, McCain Give Boost To Contract Data Legislation

Updated:
DC Examiner: Another revolutionary leap forward for federal spending transparency
Talking Points Memo: Nugget from Behind the Scenes
ThinkProgress: June 5 Think Fast summary

Update II:
Obama and McCain Agree on Transparency
Federal Times: Obama-McCain bill would post federal contracts online

By a 48-45 vote, the Senate approved a $3.03 trillion spending blueprint for FY 2009. The resolution's $1.013 trillion domestic spending level tops the president's request by some $24.5 billion.

The conference agreement on the budget blueprint was adopted 48-45 on a largely party-line vote. To accommodate the absences of hospitalized Sens. Edward Kennedy, D- Mass., and Robert C. Byrd, D-W.Va., Republican Sens. John W. Warner of Virginia and Pete V. Domenici withheld their "no" votes, pairing with the ailing Democrats.

Maine Republican Sens. Susan Collins and Olympia J. Snowe voted for the package, while Democrat Evan Bayh of Indiana voted against it. Sen. Barack Obama, D-Ill., his party's presumptive presidential nominee, voted for the package while his Republican counterpart, John McCain of Arizona, missed the vote. Hillary Rodham Clinton, D-N.Y., Obama's vanquished rival, also missed the vote — although she, like Obama, had spoken earlier in the morning to the American Israel Public Affairs Committee just blocks from the Capitol.

The budget blueprint, drafted solely by Democrats, will serve primarily as an election-year policy statement. Most of the hard choices on spending and tax policy will be deferred to the next Congress and the new president.

Sens. Barack Obama (D-IL), Tom Coburn (R-OK), Tom Carper (D-DE), and John McCain (R-AZ) introduced new legislation on June 3 as a follow-up to the 2006 Transparency Act. The bill, the Strengthening Transparency and Accountability in Federal Spending Act (S. 3077), would augment the 2006 law but go further, making important new data more easily accessible to the public and making it easier for citizens to hold our government accountable for the fiscal stewardship of our shared resources.

It should be interesting to see if this new bill will generate the same amount of chaos, confusion, and excitement that the first bill did that Obama and Coburn worked together on. Stay tuned...