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Capitol Hill Update
 

   4/21/2011
 

After a protracted, six-month struggle to finalize federal fiscal year 2011 funding, last week Congress approved and President Obama signed a package that preserves government operations through September 30, 2011. 

Despite several contentious weeks in Congress, the spending bill easily passed the Senate on an 81-19 vote and the House on a 260-167 vote on April 14.  Had the spending plan not been approved, the federal government was facing yet another potential shutdown at midnight, April 15. The final agreement reduces discretionary spending by $39.9 billion for fiscal year 2011.

Relevant to HR professionals, the spending package also repealed a second provision of last year’s Patient Protection and Affordable Care Act. The bill eliminated the “free choice voucher” program that would have allowed an employer to give an employee a fixed amount of pretax dollars (a voucher) to spend in the forthcoming health insurance exchange. Employers would have been required to offer a free choice voucher to employees who either earn less than 400 percent of the federal poverty level or who pay between 8 percent and 9.8 percent of their household income for their employer-sponsored coverage.

On April 14, President Obama signed into law a repeal of the health care law’s Form 1099 reporting requirement that businesses must report to the IRS every transaction of $600 or more with any vendor. Click HERE for more information on the 1099 repeal.

What’s Next?

With the budget now set for this current fiscal year, Members of Congress appear eager to move on to weightier spending debates—namely negotiating the fiscal year 2012 budget, raising the federal government’s $14 trillion debt ceiling, and tackling long-term entitlement spending and the growing federal deficit. The House wasted little time after the spending debate concluded when it approved (along a near party-line vote) House Budget Committee Chairman Paul Ryan’s (R-WI) 2012 budget proposal on April 15. The Ryan budget, coined “The Path to Prosperity,” restructures Medicare and Medicaid and seeks to cut about $6 trillion in spending over the next decade. 

The budget plan will next be considered by the Senate, where it stands little chance of passing in its current form, but will serve as the starting point for this year’s negotiations. Senators will also likely consider the findings of President Obama’s National Commission on Fiscal Responsibility and Reform contained in its report titled, The Moment of Truth. The commission specifically addressed the need for fiscal reform through discretionary spending cuts, health policy, Social Security, Medicare/Medicaid and changes to the U.S. tax code. Perhaps the most interesting element for HR professionals is the commission’s suggestion to reduce individual and corporate tax rates, while eliminating or curtailing tax breaks for other employer-provided benefits such as health care, Section 127 employer-provided educational assistance and retirement savings.

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