The House is ready for a stalemate on raising the government’s borrowing authority—which is set to be breached on May 18.. The Republican proposed Full Faith and Credit Act would require the Treasury Department to prioritize its interest and Social Security payments, saying the government can borrow above its limit to cover these expenses.
But the Treasury has already said it cannot prioritize payments if its borrowing limit is reached. The U.S. is set to reach it’s debt ceiling on May 18, then the Treasury will use “extraordinary measures” as long as it can (experts say about two months) to stave off a default. - Read more at The Hill
WHY REGULATORY AGENCIES ARE FURLOUGH-FREE Because of the way they structure their budgets, a handful of federal regulatory agencies including the Federal Communications Commission, the Federal Energy Regulatory Commission, the Securities and Exchange Commission, the Food and Drug Administration, the Consumer Financial Protection Bureau, the Commodity Futures Trading Commission and the Federal Trade Commission are all managing sequestration without furloughs.
The law requires every agency to cut down to the "program, project and activity" (PPA) level within each their budget account. "If a PPA is made up solely of the agency’s salaries (and doesn’t include other items within that PPA), the agency is very limited in how to achieve these savings, and more likely to have to use furloughs," an Office of Management and Budget official told The Hill. "Therefore, the structure of an agency’s budget accounts, and a variety of other factors, also impact whether or not they will be forced to furlough employees to achieve the reductions in spending required under sequestration." - Read more at The Hill
PRIVATE COLLEGES FORCED TO CUT PRICES Private universities are offering record sums of financial aid in order to keep classrooms full and compete with public universities. The average "tuition discount rate" (the reduction off list price after grants and scholarships) hit an all-time high of 45 percent last fall, according to a new survey by the National Association of College and University Business Officers. And private schools are expected to be even more generous with discounts this fall since enrollment is declining. Early reports from non-top-tier private schools show enrollment targets have fallen 10 percent to 20 percent short. “The jump in aid shows that many colleges are losing pricing power as more families focus on cost and value, with about 65 percent increasing their discount rate in the fall of 2012. Except for the most exclusive schools, private colleges increasingly are vulnerable to the stagnant wages of many families, deepening student debt, the uncertain job market, growing questions about the value of costly four-year degrees and unfavorable demographics,” The Wall Street Journal’s Ruth Simon writes. - Read more at The Wall Street Journal
THE FEW, THE PROUD, THE…PHASED OUT? With ongoing budget pressures, the Marines are becoming an endangered branch. In the age of DOD austerity, they represent low-hanging fruit that could easily be picked from the Pentagon’s tree,” The Fiscal Times’ David Francis writes. They are in the process of scaling down their forces from a peak of 202,100 to 182,100 by 2017 – a drawdown that was quietly announced last year…since the future of warfare is unlikely to require amphibious assault capabilities.” - Read more at The Fiscal Times
COULD AN ONLINE SALES TAX SPLIT HOUSE AND SENATE REPUBLICANS? A bill that allows states to collect online sales taxes is expected to sail through the Senate today, but its fate remains uncertain in the Republican-controlled House.. Currently, states can only require retailers to collect sales taxes if the store has a physical presence in the state, giving online retailers like eBay and Amazon an advantage since their shoppers’ purchases are often tax-free.
Under the bill, the sales taxes from online purchases would be sent to the states where a shopper lives.
The measure already survived three procedural votes in the Senate before lawmakers left town for a two-week recess. Among the questions for guiding the bill through the House is whether the small business exemption protecting online firms from the tax should be bumped from $1 million in revenues to $10 million, as favored by eBay and News Corp. The measure also faces opposition from anti-tax Republican groups Its fate in the Republican-controlled House remains uncertain. - Read more at The Washington Post