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House Sends State-Aid Legislation to White House

By Niels Lesniewski, CQ Staff

August 10, 2010 -- The House did what it interrupted its August recess to do: clear legislation that would provide $26.1 billion in aid to states.

House members returned Tuesday to Washington to vote on the measure (HR 1586), which would provide $16.1 billion to extend increased Medicaid aid to states and $10 billion in funding for states to create or retain education-related jobs. It was cleared by a vote of 247–161, and now heads to the president's desk.

"We're trying to pass a law that will save hundreds of thousands of additional jobs in the coming year. It will help states avoid laying off police officers, firefighters, nurses and first responders. And it will save the jobs of teachers like the ones who are standing with me today," President Obama said Tuesday in a Rose Garden event flanked by schoolteachers.

Rep. John Kline of Minnesota, ranking Republican of the House Education and Labor Committee lambasted the bill, calling it "another bailout" and "another $10 billion we don't have."

"Because of major increases in the number of school personnel in recent years, states are operating education budgets they cannot afford," Kline said. "At best, inflating state education spending for another year will kick the can down the road."

House Appropriations Chairman David R. Obey, D-Wis., meanwhile, criticized Senate Republicans for delays in moving the measure forward.

"The minority party in the Senate is using the rules of the Senate to give them the functional equivalent of the majority's ability to determine the agenda of that body," Obey said. "And they have decided to follow a 'rule or ruin' approach to governance—blocking every action they can and, in this case, delaying action to the point of complete confusion."

The Senate previously turned back the $10 billion in education funding that Obey had attached to a $58.8 billion fiscal 2010 supplemental appropriation measure to fund the wars in Afghanistan and Iraq, and other priorities (PL 111-212).

Because many states have budgets with the expectations of federal money, the state-aid package could prevent the layoff of many public sector employees. Under the bill, additional Federal Medical Assistance Percentage (FMAP) in the 2009 economic stimulus law (PL 111-5) also would be extended for an additional six months.

Democrats generally voted for the legislation, despite having concerns about some of the offsets, including an $11.9 billion reduction in mandatory spending from ending increased food stamp benefits starting in April 2014 and a $1.5 reduction in appropriated funds for an Energy Department renewable energy program.

Republicans who opposed the bill expressed concern that another offset to change foreign tax provisions could harm the economic recovery by imposing new taxes on businesses.

Those offsets—which would raise about $10 billion in revenue—target the use of the foreign tax credit by multinational corporations. Major business groups have opposed the proposals, arguing that they would make U.S. companies less competitive abroad. But Democrats argue that the changes remove incentives for U.S. companies to locate their operations overseas.

Lauren Smith contributed to this story.

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