Edge of “Fiscal Cliff” Draws Closer Every Day
As I write this update, Republicans and Democrats remain far apart in talks to avoid the across-the-board tax hikes and spending cuts that threaten to throw the country back into a recession. The focus now is on whether to extend the temporary tax cuts that originated under former President George W. Bush beyond their Dec. 31 expiration date for all taxpayers, as Republicans want, or just for those with incomes under $250,000, as President Obama proposes. At the close of the last week of November, Democrats offered a long-shot effort to force an early tax-hike vote in the Republican-controlled U.S. House to break the deadlock. Unless House Majority Leader John Boehner agrees by the first Tuesday in December to bring a bill to the floor allowing taxes on the wealthy to rise, House Minority Leader Nancy Pelosi said she would undertake the effort.
In addition to raising more than $1 trillion by ending the tax breaks for the wealthy, President Obama’s plan would help lower the national debt by reducing borrowing by more than $4.5 trillion over the next decade. It also includes money-saving adjustments to Medicare and Medicaid without raising the Medicare eligibility age or requiring vouchers.
$50 Billion in Infrastructure Spending
On November 29, President Obama proposed a deficit reduction deal that would provide an infusion of $50 billion in infrastructure spending in the coming year. Without spelling out the specifics of the spending, the President doubled down on his tactic of pairing decreased spending with increased revenue to protect government investment he argues is essential to economic growth:
“We’re going to have to raise a little more revenue. We’ve got to cut out spending we don’t need, building on the trillion dollars of spending cuts we’ve already made. And if we combine those two things, we can create a path whereAmerica is paying its bills while still being able to make investments in the things we need to grow like education and infrastructure.”
The initial response of the business community has been enthusiastic. With soaring congestion, a maintenance backlog, and rising freight and passenger demand, U.S. companies are becoming increasingly vocal in calling for government leaders to offer a solution to the nation’s transportation challenges.
Republican leaders have criticized the plan for not including enough cuts—both to discretionary spending and to entitlement programs. House Majority Leader John Boehner commented that the plan is “not a serious proposal.” He did, however, indicate that the channels of communication have remained open, telling reporters that a lot of ideas have been put on the table and that he is sure the many conversations that have occurred in the last week of November will continue.
T&I Committee Hearing on Amtrak
The House Transportation and Infrastructure (T&I) Committee held another hearing on November 28 to examine Amtrak’s ongoing structural reorganization intended to improve the performance and accountability of the railroad.
With so much focus currently being placed on the “fiscal cliff,” some are wondering why outgoing T&I Chairman John Mica is spending so much time on Amtrak when the railroad receives such a small fraction of total government spending on transportation. Chairman Mica responded to that criticism, stating that the Committee has a responsibility for taxpayer dollars and $1.4 billion has been put into Amtrak in the past year. He did, however, acknowledge the necessity of federal spending on Amtrak and passenger rail, seeming to soften some of his past rhetoric on privatization of passenger rail in the U.S.
Amtrak President Joseph Boardman defended the railroad’s performance, pointing to its recent successes. Amtrak has just set the ninth ridership record in the last 10 years and posted record ticket revenues. Last year the railroad served 31.2 million riders, up from 18-20 million riders for the last few decades, and that increased ridership has improved financial performance. Boardman stated that “in FY 2013 Amtrak will be getting by with about half as much Federal support as it had in 2004.”
Last year Boardman introduced a five-year strategic plan intended to streamline the organization, reduce costs, and boost revenue. The reorganization plan, which should be complete by the end of 2013, involves reorganizing Amtrak into six business lines, with each line held accountable for revenue goals and losses. Boardman claims that the railroad will look more like a business and less like a government agency when the plan is complete.
Inspector General Ted Alves, who is in charge of oversight of Amtrak, gave an upbeat testimony to the Committee, stating: “Overall, Amtrak has generally taken positive action on our recommendations; the company has implemented many of them, and is in the process of addressing others.” He also had this to say at the hearing: “Amtrak relies on the government for its existence and survival, but I think what’s different now is that there is a focus in the company and in the leadership levels on making the business as efficient as it can be and focusing on the customer.”
The hearing was the fourth in an ongoing series of hearings on Amtrak this year. Two more hearings are planned before the end of the year, one on December 6 to focus on the high-speed intercity rail program, and another on December 13, which will focus on the Northeast Corridor. The panel plans to reauthorize rail programs next year.
Bill Shuster to Serve as Chairman of House Transportation & Infrastructure Committee for 113TH Congress
On November 28, Congressman Bill Shuster (R-PA) was selected by the House Republican Conference to be the next Chairman of the House Transportation and Infrastructure (T&I) Committee. Shuster has served on the House T&I Committee since coming to Congress in 2001 and currently chairs the Subcommittee on Railroads, Pipelines, and Hazardous Materials. He has also served as Chairman of the Subcommittee on Economic Development, Public Buildings, and Emergency Management. Shuster will replace John Mica (R-FL), who has chaired the T&I Committee for the last six years. Caucus-imposed term limits prevent Mica from continuing.
Medicare Premiums to Rise by $5 Per Month in 2013
Beginning in January 2013, standard Medicare Part B monthly premiums will increase from $99.90 to $104.90, which is less than was expected. Some beneficiaries will continue to pay higher premiums based on their modified adjusted gross income. The monthly premiums that include income-related adjustments for 2013 will be $146.90, $209.80, $272.70, or $335.70, depending on the extent to which an individual beneficiary’s modified adjusted gross income exceeds $85,000 (or $170,000 for a married couple). The highest premium rate applies to beneficiaries whose incomes exceed $214,000 (or $428,000 for a married couple). Other changes relating to Medicare Parts C and D will take effect in 2013 as well.
Those railroad retirement and social security Medicare beneficiaries affected by the 2013 Parts B and D income-related premiums will receive a notice from the Social Security Administration (SSA) by December 2012. The notice will include an explanation of the circumstances where a beneficiary may request a new determination. Persons who have questions or would like to request a new determination should contact SSA after receiving their notice. For the complete information and a table that shows the income-related premium adjustments for 2013, please see the entire Railroad Retirement Board press release at: http://www.rrb.gov/opa/pr/pr1214.asp.