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The Impasse Continues -- An Innovation Briefs Advisory (July 23, 2004)

Efforts to reach a compromise on the highway-transit reauthorization bill failed as the House-Senate Conference committee adjourned for the summer recess without reaching agreement on the overall funding level. At its July 22 meeting, the House leadership made an offer, blessed by the White House, to raise the guaranteed obligation level to $284 billion ($299 billion in gross contract authority less $15 billion in rescissions from prior unobligated balances). This is $28 billion more than the figure the White House initially said it would accept, but still $34 billion less than the $318 billion approved by the Senate.

Last week, in a last ditch attempt to break the impasse and keep the negotiations going, Sen. James Inhofe (R-OK), chairman of the Senate Environment and Public Works Committee, proposed to lower the Senate funding level to $289 billion in guaranteed spending ($301 billion in contract authority). That would have narrowed the difference between the House and Senate proposals to a mere $5 billion. But Inhofe failed to muster support from the Democrat conferees for the lower figure, so his proposal never achieved official standing.

The latest short-term extension will expire on September 24 for the federal highway programs and September 30 for the transit and safety programs. While the Senate negotiators said they are prepared to give the latest House offer their full consideration, the ultimate outcome of the conference is by no means clear. The White House, having already made a significant concession, will be in no mood to compromise any further. It will also continue to insist that the bill must not contain a "re-opener" clause and must not add to the deficit or take money from outside the trust fund. With the House Republican leaders determined not to send the President a bill that he would feel obliged to veto, the outcome of the conference is in the hands of the Senate conferees, and particularly its Democrat members whose backing is necessary to gain approval for a negotiated compromise. However, the Democrats might see it to their advantage to continue the stalemate rather than give the President a legislative victory so close to the elections. In addition, some senators of both parties entertain the hope that a new administration, whether Republican or Democrat, will be more sympathetic to higher spending levels, come next year. Hence, Senate conferees’ eventual acceptance of the House proposal to cap spending at $284 billion is still very much in doubt.

Even if conferees do reach agreement on the overall spending level by September 24, a host of thorny issues will still remain outstanding. Foremost among them is the question of how would the funds be distributed. Would the House figure allow the minimum guarantee to increase from its present 90.5 percent, and if so by how much? What percentage of funds in the bill would be allocated to core programs? Would the traditional 80-20 split between highway and transit money be maintained?

When Congress returns in the first week of September, it will face a crowded agenda that includes passage of most of the FY 2005 appropriations bills. Will the lawmakers find the time and the inclination to resolve the many differences between the House and Senate versions of the reauthorization bill, and complete floor action before the end of the session? Or will the measure die in the rush to adjourn for the elections? No one is laying any bets on the outcome.

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