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Senate Sends $26.1 Billion State-Aid Package to House

By Niels Lesniewski, CQ Staff

August 5, 2010 -- The Senate on Thursday approved a $26.1 billion state-aid package that the House is poised to consider next week, after being called back from August recess.

The measure (HR 1586) would provide funds for state and local governments to prevent layoffs of teachers and maintain Medicaid health coverage of the poor, despite budget crunches. The vote was 61-39.

The House Rules Committee scheduled a meeting for 6 p.m. Monday, Aug. 9, to set ground rules for considering the aid package when the House assembles at 10 a.m. Aug. 10.

New York Gov. David A. Paterson had warned in an interview with CNBC earlier this week that some 30 states have budgeted on the assumption the federal funds would arrive.

Republicans have criticized the legislation, saying it is essentially an election-year gambit by Democrats to assuage teachers' unions.
"There's nothing in this bill that says that anyone has to belong to a union," Sen. Tom Harkin, D-Iowa, chairman of the Health, Education, Labor and Pensions Committee, responded Thursday.

Harkin praised Maine Republicans Olympia J. Snowe and Susan Collins, who provided the crucial votes needed Wednesday to surmount a filibuster against the bill, for "putting our kids ahead of their party ideology" and backing the measure.

The legislation would provide $10 billion for education jobs and give six more months of increased federal Medicaid reimbursements to states at a cost of $16.1 billion. The effort was led by Majority Leader Harry Reid, D-Nev., and Patty Murray, D-Wash., who are both facing re-election challenges.

The Congressional Budget Office says the bill is budget-neutral over 10 years. However, the offsets, a potpourri of spending rescissions and revenue-raisers, drew criticism from a number of sources.

Republicans dislike provisions that target the use of foreign tax credits by multinational corporations. Unlike earlier versions of the bill, which included retroactive effective dates and raised more than $14 billion, the version included in the final measure generally has prospective effective dates and would raise about $10 billion.

On the spending side, supporters of the supplemental nutrition assistance program — better known as food stamps — oppose reductions starting in 2014 to extra benefits provided under the 2009 economic stimulus law (PL 111-5).

In addition, the bill would rescind $1.5 billion in stimulus funds for an Energy Department program backed by many Democrats including House Speaker Nancy Pelosi, D-Calif. Reid told reporters Thursday that he had already spoken to Jacob Lew, nominated as director of the Office of Management and Budget, and that the energy funding is only "temporarily gone."

An aide to House Rules Committee Chairwoman Louise M. Slaughter, D-N.Y., indicated prior to the Senate vote that the committee is likely to meet the evening of Monday, Aug. 9, to set up Tuesday floor consideration of the measure. The House is expected to send the bill to President Obama for his promised signature.

Before passing the bill, the Senate easily defeated two motions to suspend the rule that prevents non-germane amendments or motions after cloture has been invoked.

Jim DeMint, R-S.C., sought to commit the bill to the Finance Committee to require that panel to report it back with permanent extensions of 2010 individual and small-business income tax rates, requiring spending rescissions as offsets. Max Baucus, D-Mont., Finance Committee chairman, blasted the idea as "a gimmick," and "not serious."

— Edward Epstein contributed to this story.

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