Northern Border Regional Commission Reauthorization Act of 2013

I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on the consideration of H.R. 933 and that I may include tabular material on the same.

Mr. Speaker, pursuant to House Resolution 99, I call up the bill (H.R. 933) making appropriations for the Department of Defense, the Department of Veterans Affairs, and other departments and agencies for the fiscal year ending September 30, 2013, and for other purposes, and ask for its immediate consideration.

Mr. Speaker, I yield myself such time as I may consume.

I rise to present H.R. 933, the Department of Defense and Military Construction and Veterans Affairs Appropriations, and Full-Year Continuing Resolution for fiscal year 2013.

Our Nation faces a three-pronged threat to its finances as we deal with sequestration, the debt ceiling, and, most immediately, a looming government shutdown.

This bill takes the risk of a government shutdown off the table, funding the government for the remainder of the fiscal year while helping maintain our national security and providing our troops and veterans with consistent, adequate funding.

First and foremost, this bill contains fiscal year 2013 appropriations bills for the Departments of Defense and Veterans Affairs. These bills were crafted by Chairman Bill Young, chairman of the Defense Appropriations Subcommittee, and very handily done.

These bills passed the House with broad bipartisan support last year. They have been negotiated on a bipartisan basis by the House and the Senate, and agreed to by the Senate Committee. They do not add a cent to the overall top line of the CR.

I want to take a minute here to thank Bill Young and his subcommittee, who did such a tremendous job of balancing the interests of the country but with the overriding concern for the security of the country as they drafted--and passed on a bipartisan basis--the Defense appropriations bill.

Last week, I had the opportunity to ask the Joint Chiefs of our military if they supported this CR package, and the answer was an absolute, wholehearted ``yes.'' In fact, each one of them was asked if it was critical, and each one of the Joint Chiefs said this was critical to the defense of the country.

This legislation addresses severe funding constraints that would put our national security in dire straits. Military hospitals would not be built, veterans would not be cared for adequately, and our readiness would be seriously jeopardized. With sequestration now in effect, this bill allows the Pentagon some leeway to do its best with what it has.

The bill provides $518 billion, the same top line level as last year. Within this top line, accounts have to be re-prioritized to ensure adequate investment in critical programs, such as operation and maintenance, while finding savings in lower priority areas.

The legislation right-sizes spending that would otherwise have been wasted. For instance, we eliminate funding for unneeded spare parts and save funding from outdated programs and projects related to operations in Iraq no longer needed.

In addition, the bill provides $71.9 billion in discretionary funding for military construction and veterans affairs to ensure that our veterans get the care they have earned and that the quality of life in our military is continued. This includes an increase of about $2.5 billion in veterans funding, offset by savings in military construction.

The remainder of the bill, Mr. Speaker, funds the rest of the Federal Government until the end of the fiscal year on September 30. Nearly all funding will remain consistent with current levels, except for the very few exceptions that are needed to prevent catastrophic changes to government programs or to ensure good government. These include provisions allowing critical law enforcement entities to maintain current staffing levels, additional funding for embassy security and critical weather satellite launches, and an extension of the current pay freeze for Federal employees--including Members of Congress.

We've also required every single Federal agency to provide spending plans to Congress to ensure transparency and strong oversight of taxpayer dollars.

Nearly all of the funding in this bill is subject to the President's sequestration, bringing the grand total for discretionary spending to around $984 billion. The bill is designed to help with the damage caused by continually putting off the regular annual appropriations bills, but it does not solve the many serious problems caused by these automatic spending cuts in sequestration.

A full-year continuing resolution is not the way this Congress should be appropriating taxpayer dollars. Each year, we should assess the needs and excesses of our government and make decisions accordingly in the regular appropriations process. We must return to regular order, pass individual spending bills on time, and fulfill our constitutional duty to fund government programs wisely and effectively. To do all of this, we have to have a partner in the Senate, and we've not had that now for these several years. Our hope springs eternal that the Senate will help us get back to regular order.

In light of the circumstances we face, we must make a good-faith effort to provide limited but fair and adequate funding for vital government programs and services through the end of the fiscal year. It is up to Congress to make these decisions to set the course for our financial future.

We must act now to make the most of this difficult situation, and that starts with avoiding a government shutdown on March 27 and providing for our national defense and veterans.

This CR package is the right thing to do, the right time to do it, and it is the fair thing.

And so I urge, Mr. Speaker, my colleagues to show our Nation that we can get our work done by supporting this bill.

I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the very distinguished and hardworking chairman of the House Armed Services Committee, the gentleman from California (Mr. McKeon).

Mr. Speaker, I now yield 4 minutes to the gentleman from Texas (Mr. Culberson), the chairman of the Military Construction and Veterans Affairs Subcommittee on appropriations.

Mr. Speaker, I yield now 3 minutes to the vice chairman of the House Armed Services Committee, the gentleman from Texas (Mr. Thornberry).

Mr. Speaker, I yield 1 minute to the gentleman from Pennsylvania (Mr. Shuster), who chairs the Transportation and Infrastructure Committee, for the purpose of a colloquy.

I thank the gentleman for yielding and would confirm that the gentleman is correct. The prohibition in the NDAA is law, and nothing in this bill or report overrides or changes that fact. The language in our report was conferenced last year when the outcome of MEADS

in the NDAA was not known. Chairman Young works closely with the Armed Services Committee, and it is not our intention to change or override any provision of that bill. The prohibition in the bill is the law.

Mr. Speaker, I yield myself 1 minute, and I yield to the gentleman from California (Mr. Issa) for the purpose of a colloquy.

The gentleman is correct. OMB did submit a list of proposed anomalies on February 18.

OMB did not propose any change to the provisions in current law regarding 6-day mail delivery.

Mr. Speaker, I yield 1 minute to the gentleman from California (Mr. Issa), the chairman of the House Oversight and Government Reform Committee.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, may I inquire of the time?

Mr. Speaker, I yield 4 minutes to the gentleman from New Jersey (Mr. Frelinghuysen), the distinguished vice chairman of the Defense Subcommittee on Appropriations.

I yield the gentleman an additional 1 minute.

While we're waiting for the Senate to send us a bill relieving us of sequestration, while we're waiting for the President to send us something to relieve us of sequestration, we have no choice but to pass a continuing resolution to keep the government operating.

Sequestration I hope we can deal with in the future, but now we're dealing with whether or not to shut the government down. Is that not correct?

I thank the gentleman.

Will the gentlelady yield?

Would the gentlelady be so kind as to talk to the majority leader in the Senate about sending us over a bill to relieve us of sequestration? And, two, would the gentlelady talk to her President to see if he would do that? We're ready to act.

If the gentlelady will yield, last year we voted twice in this body to replace sequestration, and it died because the Senate wouldn't take it up.

Mr. Speaker, might I inquire how many speakers remain on the gentlelady's side. I have one remaining speaker.

Mr. Speaker, I yield myself 1 minute and would ask Mr. Visclosky if he might rejoin us at the microphone.

On the point the gentleman just broached and, that is, the passage of bills, one of the most frustrating things of my life is that we cannot get the Senate to pass any appropriations bills.

As the gentleman knows--because he helped pass the Defense bill for this year and all years--we passed, through the House committee, all 12 bills. We sent them to the Senate, and all we got back was a resounding snore. They didn't do anything. When the Senate doesn't appropriate, in spite of the fact that we've passed all of our bills over here, we have to pass a continuing resolution. That is where we are. I lament that, as does the gentleman. And I know that he joins me in wanting us to pass, through regular order, each individual bill, bring it to the floor, let the Members have their say and vote on amendments and the like.

I yield to the gentleman from Indiana.

Mr. Speaker, I yield 3 minutes to a hardworking Member, the gentleman from Iowa (Mr. Latham), who chairs the Transportation, Housing and Urban Development Subcommittee on Appropriations.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, this is all about whether or not we shut down the government. This is a bill to keep the government operating while we debate, then, how we deal with sequestration.

This is not a sequestration bill. This is a bill to continue funding the government for the balance of the fiscal year and to help the military cope with the restrictions so that our Nation is adequately defended by our men and women in uniform.

I urge the adoption of the continuing resolution. Let's keep the government going.

I yield back the balance of my time.

Mr. Speaker, I rise in opposition.

Mr. Speaker, the budgetary problems we face are unprecedented, and the American public demands that we address them. This continuing resolution is the first step in that process.

The measure before us does four important things: one, it takes threat of a government shutdown off the table; two, it fulfills the agreements made in the Budget Control Act; three, it protects our troops in harm's way; and, four, it binds up our veterans' wounds.

This is not the time, Mr. Speaker, to argue about sequestration. Today is the day to keep the government running and show the people back home we've not lost the ability to govern.

The House has passed two separate responsible sequestration replacement bills only to have both of them languish in the other body without action. We're still waiting, Mr. Speaker.

The President must come to the table with a real proposal to solve the sequestration crisis instead of sending us the same old talking points and doing campaign trips around the country.

The public is tired of government putting politics ahead of people. Now is the time to take a shutdown off the table. Now is the time to give our troops and our veterans the resources they need, deserve, and have earned. Now is the time, Mr. Speaker, to govern.

Vote ``no'' on this motion, and vote ``yes'' to keep the government operating.

With that, I yield back the balance of my time.

Mr. Speaker, given the bicameral and bipartisan support for our bill and the overwhelming consensus about the systemic risk created by the section we are working to reform today, I am genuinely surprised we are even here debating this today.

Nevertheless, I rise to speak in support of H.R. 992, the Swaps Regulatory Improvement Act, which my Democrat friend from New York, Sean Patrick Maloney, and I have worked together on in the House Agriculture Committee.

As my colleagues are aware, our bipartisan bill amends a provision in the Dodd-Frank Act which was included at the 11th hour to ``get 60 votes in the Senate'' as former House Financial Services Chairman Barney Frank indicated during a markup of the bill back in February, 2012.

This section we reform with our bill was mischaracterized as an effort to prevent ``risky'' swaps activities in the bank. While we believe this provision was proposed in good faith, it simply does not prevent the risk that its authors intended. Moreover, this provision of the bill will cause many American financial institutions to operate at a significant disadvantage to their foreign competitors.

Federal Reserve Chairman Ben Bernanke and former Federal Reserve Chairman Paul Volcker have both publicly raised concerns about section 716.

In the 112th Congress, the House Financial Services Democrats, including Chairman Frank and current Ranking Member Maxine Waters, endorsed H.R. 1838, agreeing that this measure addressed the valid criticisms of section 716 without ``weakening the financial reforms law's important derivative

safeguards or prohibitions on bank proprietary trading.''

The bill before us today is virtually identical to H.R. 1838 from the last Congress.

Mr. Speaker, to echo what Federal Reserve Chairman Ben Bernanke said at a hearing on February 27:

Section 716, as drafted, will not reduce risk and will

likely increase costs of people who use the derivatives and

make it more difficult for the bank to compete with foreign

competitors who can provide a more complete set of services.

It is crystal clear: this section needs to be reformed.

I ask my colleagues to support this bill and look forward to my Senate colleague, Kay Hagan, passing her companion bill in the Senate so we can get this commonsense reform completed.

Board of Governors of the

Federal Reserve System,

Washington, DC, May 12, 2010.

Hon. Christopher J. Dodd,

Chairman, Committee on Banking, Housing, and Urban Affairs,

U.S. Senate, Washington, DC.

Dear Mr. Chairman: You have asked for my views on section

716 of S. 3217. This section would prevent many insured

depository institutions from engaging in swaps-related

activities to hedge their own financial risks or to meet the

hedging needs of their customers, and would prohibit nonbank

swaps entities, including swap dealers, clearing agencies and

derivative clearing organizations, from receiving any type of

Federal assistance.

The Federal Reserve has been a strong proponent of changes

to strengthen the regulatory framework and infrastructure for

over-the-counter (OTC) derivative markets to reduce systemic

risks, promote transparency, and enhance the safety and

soundness of banking organizations and other financial

institutions. Title VII and Title VIII of S. 3217 include

important provisions designed to achieve these goals. For

example, Title VII would require most derivative contracts to

be cleared through central clearinghouses and traded on

exchanges or open trading facilities, require information

concerning all other derivatives contracts to be reported to

trade repositories or regulators, and provide the regulatory

agencies significant new authorities to ensure that all swaps

dealers and major swap participants are subject to strong

capital, margin, and collateral requirements with respect to

their swap activities. Title VIII also includes provisions

designed to help ensure that centralized market utilities for

clearing and settling payments, securities, and derivatives

transactions (financial market utilities), which are critical

choke points in the financial system, are subject to robust

and consistent risk management standards--including

collateral, margin, and robust private-sector liquidity

arrangements--and do not pose a systemic risk to the

financial system.

I have also frequently made clear that we must end the

notion that some firms are ``too-big-to-fail.'' For that

reason, the Federal Reserve has advocated the development of

enhanced and rigorous prudential standards for all large,

interconnected financial firms, and the enactment of a new

resolution regime that would allow systemically important

financial firms to be resolved in an orderly manner, with

losses imposed on the Federal Reserve to provide emergency,

secured credit to nondepository institutions only through

broad-based liquidity facilities designed to address serious

strains in the financial markets, and not to bail out any

specific firm.

S. 3217 makes important contributions to the goals of

reducing systemic risk, eliminating the too-big-to-fail

problem, and strengthening prudential supervision. I am

concerned, however, that section 716 is counter-productive to

achieving these goals.

In particular, section 716 would essentially prohibit all

insured depository institutions from acting as a swap dealer

or a major swap participant--even when the institution acts

in these capacities to serve the commercial and hedging needs

of its customers or to hedge the institution's own financial

risks. Forcing these activities out of insured depository

institutions would weaken both financial stability and strong

prudential regulation of derivative activities.

Prohibiting depository institutions from engaging in

significant swaps activities will weaken the risk mitigation

efforts of banks and their customers. Depository institutions

use derivatives to help mitigate the risks of their normal

banking activities. For example, depository institutions use

derivatives to hedge the interest rate, currency, and credit

risks that arise from their loan, securities, and deposit

portfolios. Use of derivatives by depository institutions to

mitigate risks in the banking business also provides

important protection to the deposit insurance fund and

taxpayers as well as to the financial system more broadly. In

addition, banks acquire substantial expertise in assessing

and managing interest rate, currency, and credit risk in

their ordinary commercial banking business. Thus, banks are

well situated to be efficient and prudent providers of these

risk management tools to customers.

Importantly, banks conduct their derivatives activities in

an environment that is subject to strong prudential Federal

supervision and regulation, including capital regulations

that specifically take account of a bank's exposures to

derivative transactions. The Basel Committee on Banking

Supervision has recently proposed tough new capital and

liquidity requirements for derivatives that will further

strengthen the prudential standards that apply to bank

derivative activities. Titles I, III, VI, VII and VIII of

S.3217 all add provisions further strengthening the authority

of the Federal banking agencies and other supervisory

agencies to address the risks of derivatives. Section 716

would force derivatives activities out of banks and

potentially into less regulated entities or into foreign

firms that operate outside the boundaries of our Federal

regulatory system. The movement of derivatives to entities

outside the reach of the Federal supervisory agencies would

increase, rather than reduce the risk to the financial

system. In addition, foreign jurisdictions are highly

unlikely to push derivatives business out of their banks.

Accordingly, foreign banks will have a competitive advantage

over U.S. banking firms in the global derivatives

marketplace, and derivatives transactions could migrate

outside the United States.

More broadly, section 716 would prohibit the Federal

Reserve from lending to any swaps dealer or major swap

participant--regardless of whether it is affiliated with a

bank--even under a broad-based 13(3) liquidity facility in a

financial crisis. Experience over the past two years

demonstrates that such broad-based facilities can play a

critical role in stemming financial panics and addressing

severe strains in the financial markets that threaten

financial stability, the flow of credit to households and

businesses, and economic growth. These facilities will be

less effective if participants must choose between continuing

(or unwinding) derivatives positions and participating in the

market-liquefying facility.

I am concerned that section 716 in its present form would

make the U.S. financial system less resilient and more

susceptible to systemic risk and, thus, is inconsistent with

the important goals of financial reform legislation. We look

forward to continuing to work with the Congress as you work

to enact strong regulatory reform legislation that both

addresses the weaknesses in the financial regulatory system

that became painfully evident during the crisis, and

positions the regulatory system to meet the inevitable

challenges that lie ahead in the 21st century.

Sincerely,

Ben Bernanke.

Mr. Speaker, I yield myself such time as I may consume.

Before us is a defense bill and a Military Construction-Veterans Affairs bill adjusting the FY 2012 funding levels to meet FY 2013 needs.

It is unacceptable that Federal agencies and departments covered by the 10 remaining bills would be forced to operate under full-year continuing resolutions based on planned spending levels enacted 15 to 18 months ago. Congress' failure to do our jobs and pass responsible annual spending bills limits our ability to respond to changing circumstances, implement other laws enacted by Congress, and eliminate funding that is no longer necessary.

Specifically, this bill will delay implementation of the Affordable Care Act scheduled to begin enrolling participants in October. Without IT infrastructure to process enrollments and payments, verify eligibility, and establish call centers, health insurance for millions of Americans would be further delayed. Last year's levels will hamper enforcement of Dodd-Frank protections against improper practices in the financial sector.

The bill underfunds Head Start, child care, essential for many working parents who would otherwise have to quit their jobs.

The bill fails to strike outdated language allowing HUD to use public housing agency reserves to fund operations or provide a requested increase to make up for the shortfall resulting in the lowest per-unit operating subsidy since 2007, despite rising housing costs.

The bill we consider today even denies increases for health care fraud and abuse control and Social Security disability reviews and SSI eligibility determinations, both of which return more money to the Treasury than they cost.

And the continuing resolution excludes loan guarantees for Jordan, necessary to help an important ally stabilize its economy.

The effects, my colleagues, of these outdated plans and spending levels in the continuing resolution are compounded by Congress' failure to replace sequestration with a balanced, responsible, long-term debt reduction plan. The Congressional Budget Office estimates that sequestration would cut economic growth in 2013 by a third. That's jobs. That's people's lives.

Last year, our fragile economy struggled to create a total of 2.2 million jobs. CBO says sequestration will wipe out, get rid of, 750,000 jobs, more than a third of all the jobs created last year.

Now, I want to make it very clear, my colleagues, this bill reaffirms sequestration. The terrible impact of those indiscriminate cuts will begin to take effect. This summer, we can expect significant flight delays and long lines at airports due to furloughs of air traffic controllers and a hiring freeze and reduced hours for transportation security officers.

Yesterday, the Labor-HHS Subcommittee, heard testimony from the directors of the National Institutes of Health and CDC on the detrimental effects these irresponsible cuts will have, including declining medical research, fewer child vaccinations, and reduced protections against epidemics. Just try and explain that to dear friends and neighbors who have children with autism, seniors who are dealing with Alzheimer's, friends who have heart cardiology issues. Just try and explain what the National Institute cuts in research will do. In addition to the impact in the research on these illnesses, these are real people who are going to be laid off and impede our future research.

All Americans rely on timely and accurate weather warnings and forecasts from the National Weather Service. Reduced resources will compromise critical satellites, radar, computer analysis, and modeling.

Now, I am pleased that two bills, the defense bill and the Military Construction-Veterans Affairs bill, are the FY 2013 bills that were agreed on by the House and the Senate. But, my colleagues, let's not forget that sequestration will still strike our national defense.

Even if this bill is enacted, another $46 billion will be subtracted from defense spending. Most of the civilian workforce will face significant furloughs, readiness will still face cuts, and defense health care will need to make some very tough choices with scarce resources.

Mr. Speaker, I cannot support this bill because it fails to take responsible steps to support the middle class in really tough economic times or responsibly address the long-term fiscal health of our Nation.

I reserve the balance of my time.

Mr. McKeon, I just want to emphasize again that General Odierno in the recent appropriations hearing on the Defense bill testified that sequester would be a disaster for the military. And it's unfortunate that we are not ridding ourselves of the prospect of the disaster that the sequester bill will result in.

Announcement by the Speaker Pro Tempore

At this time, I'm delighted to yield 2 minutes to my distinguished leader from Maryland (Mr. Hoyer).

(Mr. HOYER asked and was given permission to revise and extend his remarks.)

I yield an additional 1 minute to the gentleman.

I yield an additional 30 seconds to the gentleman.

I would just like to quickly remind my colleagues on both sides of the aisle that the Defense bill will be subject to the $46 billion as a result of sequestration, which General Odierno said will hollow out the force.

Mr. Speaker, I am very honored to yield 2 minutes to my colleague, the

gentleman from North Carolina, Mr. David Price, a distinguished ranking member of the Appropriations Committee.

Mr. Speaker, may I ask how much time remains.

Mr. Speaker, I am pleased to yield 2 minutes to the distinguished ranking member, the gentleman from New York (Mr. Serrano).

Mr. Speaker, I'm very pleased to yield 2 minutes to the gentlewoman from Ohio (Ms. Kaptur), the distinguished ranking member of the Energy and Water Subcommittee.

I yield an additional 15 seconds to the gentlewoman.

Mr. Speaker, I'm delighted to yield 2 minutes to my friend, the gentlewoman from Connecticut (Ms. DeLauro), the distinguished ranking member of the Labor, Health, Human Services, Education Subcommittee.

Mr. Speaker, I am very pleased to yield 1 minute to the gentleman from California (Mr. Farr), the distinguished ranking member of the Agriculture Subcommittee of Appropriations.

Mr. Speaker, I am very pleased to yield 2 minutes to the gentleman from Georgia (Mr. Bishop), the distinguished ranking member of the MILCON Subcommittee of Appropriations.

Mr. Speaker, I yield myself such time as I may consume.

Before I yield to my next speaker, I would like to thank Mr. Frelinghuysen for addressing sequestration and the devastating testimony of all those representing our distinguished Armed Forces. But I would also like to clarify again that this continuing resolution reaffirms sequestration. It does nothing in language or deed to make any efforts to cancel sequestration. We on this side of the aisle would be very pleased to continue to work with you in regular order to go through every bill, casting away waste, fraud and abuse, but to do away with sequestration. And I know my distinguished chair and I could work it out so that we could not have sequestration.

This bill, section 3002, reaffirms sequestration.

I yield to the gentleman from Kentucky.

Mr. Chairman, I would be delighted to work with you, but I have read this continuing resolution very carefully and section 3002 reaffirms sequestration. Let's work together. We can be the leaders. Let's send over a bill that does away with sequestration, which my good friend, Mr. Frelinghuysen, says--and I was at that defense hearing, too--would hollow out our forces. Let's do that. Let's do that today. Why don't you submit an amendment? Let's get rid of sequestration.

I would be delighted, Mr. Speaker, to yield 1 minute to our distinguished leader, who has provided important leadership on the issue of cutting out waste, fraud, and abuse in our budget, the gentlewoman from California (Ms. Pelosi).

Mr. Speaker, we have three remaining speakers.

Mr. Speaker, I am delighted to yield 2 minutes to the gentlewoman from Florida (Ms. Wasserman Schultz), the distinguished ranking member of the Leg Branch Subcommittee of Appropriations.

Mr. Speaker, I am delighted to yield 2 minutes to the distinguished ranking member of the Defense Appropriations Committee, the gentleman from Indiana (Mr. Visclosky).

I am delighted to yield the balance of my time to a distinguished Member of the Appropriations Committee, the gentlewoman from California, Ms. Barbara Lee.

Let me thank our ranking member for yielding and for her tremendous leadership.

First of all, let me just make this point. This bill--actually, this CR--reaffirms sequestration, and it really could have been canceled. I have to tell you, also, that at a time when the Pentagon has enjoyed a decade of unchecked defense spending, this bill gives the Pentagon new flexibility to cushion the effects of sequestration. Again, it reaffirms sequestration.

At the same time, the bill ignores the impacts of these devastating cuts on the American public. These sequestration cuts would not only hurt low-income families first and hurt them the most, but also communities of color and the millions of Americans who still are struggling to find a job.

The sequester will impact my congressional district, my home State of California, and every single household in America. It also underfunds the vital programs that protect public health and safety, promote and develop our workforce, and educate the next generation.

While all of us believe that it's important to keep the government functioning, governing by a continuing resolution is really no way to run the Federal Government. We need to rein in Federal spending and spend our security dollars wisely on proven programs that meet today's national security needs, but we also must begin some nation building here at home. The American people deserve better than that. Not only is this resolution a fiscal disaster, it is morally wrong.

[From the New York Times, March 5, 2013]

California, on Brink of Recovery, Braces for Setback on Federal Aid

(By Norimitsu Onishi)

San Francisco.--After years of ballooning budget deficits,

California finally seemed on firmer footing. Unemployment

remained high, but revenues and housing prices were up.

Taxpayers even voted themselves a tax increase to bring

deficits down.

And then came the automatic federal budget cuts known as

sequestration.

As the $85 billion in spending cuts slowly roll out

nationwide, California officials are girding themselves for a

blow not only to the state's large military industry but also

to its nascent economic recovery. Still, experts say, it will

most likely slow down, though not derail, the state's

economic growth.

The cuts, which began to take effect on Friday and will

accelerate as time passes, will amount to a loss of an

estimated $9 billion for California this year. The military

industry will incur the biggest reduction, $3.2 billion, but

education, social programs and other areas that were hit

particularly hard by California's budget turmoil in recent

years will also face cuts.

State officials await word from Washington on exactly how

the cuts will be put in place in the weeks and months ahead,

hoping that the long-term ripple effects on California's

consumers and businesses will become clearer.

``It's very frustrating for a state like California, where

we've had housing-market and job-market gains beginning to

solidify here,'' said Jason Sisney, the director of state

finance at the nonpartisan California Legislative Analyst's

Office. ``And just as that's happening, we have the federal

government taking actions that could impede that recovery.''

Despite the size of military and federal programs in

California, the state's $2 trillion economy is larger and

more diverse than the economies of other states, and less

dependent on federal workers.

``California will be an average state,'' said Stephen Levy,

the director of the Center for Continuing Study of the

California Economy. ``We won't be hit less, and we won't be

hit more.''

Jerry Nickelsburg, an economics professor and expert on the

California economy at the Anderson School of Management at

the University of California, Los Angeles, said: ``But is it

sufficient to choke off the recovery in California? I think

the answer is no. Will it slow the growth of the California

economy? The answer is yes.''

Because the automatic budget cuts had been set up to force

Democrats and Republicans to negotiate over cuts and

spending--and not to be actually put in place--California

officials, like their counterparts in other state capitals,

have received only general guidance so far from the Office of

Management and Budget on how to carry out the cuts. But in

the coming weeks, federal agencies are expected to provide

details on their respective spending cuts.

``As we learn more the specifics on how they're going to do

that, then we will have a better sense of how it will impact

the state,'' said H. D. Palmer, a deputy director at the

California Department of Finance.

State officials could have to adjust for the cuts in the

state budget revision scheduled for May. In January, Gov.

Jerry Brown announced the first balanced budget in years,

thanks largely to a temporary tax surcharge that voters

approved in November.

The budget cuts are expected to be felt strongly in the San

Diego area, where the military industry plays a significant

role in the economy. According to the White House,

California's 64,000 civilian military workers will be

furloughed starting next month, most likely by losing a day

of work a week over several months. The White House estimates

that the furloughs will total a $400 million reduction in

gross pay this year.

Military contractors in the area are also bracing for cuts.

Marion C. Blakey, the president of the Aerospace Industries

Association, a trade group based in Arlington, Va., said

larger contractors could absorb the loss of an anticipated

order. But smaller members, she said, could be forced to lay

off highly paid engineers, and in that way dampen the

regional economy.

``These are companies that often do not have the resilience

and flexibility to take this kind of body blow,'' Ms. Blakey

said, adding that these were typically highly specialized

companies incapable of quickly shifting their businesses.

``As an industry, we are very concerned about the third and

fourth tier in the supply chain, and California has a lot of

those kinds of companies.''

Gregory Bloom, a member of the trade group's executive

board and the president of Seal Science, a 120-employee

aerospace company in Irvine, Calif., said his business had

already suffered from the cuts. Because of the uncertainty

surrounding federal financing of military-related programs,

his company had lost two top engineers and was unable to fill

four existing engineering positions, he said.

``In my entire career, I've never been in a situation where

I can't at least put some probability on what's going to

happen,'' Mr. Bloom said, adding that he had delayed

expanding capacity at a plant as a result. ``There's

absolutely no way to plan.''

The cuts could hurt California's schools and colleges,

whose budgets have been slashed in recent years. The

University of California system is expected to face at least

a 5 percent cut in the $3.5 billion it receives annually in

federal research money. Cuts in federal student aid programs

will affect the next academic year.

``As a family starts to plan for what's going to happen

next year--how much money do I need to send my son or

daughter to school?--these are unknowns right now until we

get more information from the federal government,'' said Gary

Falle, the University of California's associate vice

president for federal government relations.

According to the White House, California will also lose $88

million in federal money for primary and secondary education

this year. Though Washington accounts for less than 11

percent of the state's budget for schools, that share has

taken on increasing weight in recent years because of state

cuts, said Erika Webb-Hughes, an official at the California

Department of Education's government affairs division.

The cuts are likely to affect disadvantaged students the

most, including those with disabilities, Ms. Webb-Hughes

said. The uncertainty of the magnitude of the cuts will also

make it difficult for school districts to plan for next year

because, by state law, they must notify staff members of

their future employment status by March 15.

``People will be sending out pink slips,'' Ms. Webb-Hughes

said. ``Even if at the end of the year there is a miraculous

agreement in the Congress that averts a majority of this

issue, the damage is already done.''

I thank my colleague, Congresswoman Lowey, for her leadership and for yielding time on this important debate.

I listened, too, attentively to Mr. Frelinghuysen and the distinguished chairman of the Appropriations Committee, and I heard Mr. Frelinghuysen say how awful sequestration would be. And I completely concur with him on that. I also heard him say nothing in this bill does anything on sequestration. Well, if it does not, why is it in the bill? Is it to get votes on the Republican side because there's not the support for the investments that were called for in the Budget Control Act? If that's the case, let's be clear about it and put it forth. But if it has nothing to do with sequestration, Mr. Frelinghuysen, why is it in the bill? Is it a waste of time and space? Is it a topic of discussion that is fruitless because it has nothing to do with sequestration but it's in there because it sends a very serious message?

And why are we in this place? We're in this place, the Chamber of the House of Representatives, to represent the American people. We recognize that a thriving middle class is the backbone of our democracy and that we are here to meet the needs of the American people and strengthen that democracy. With the legislation that is before us today, we undermine all of those efforts.

With the sequestration, which is reaffirmed in this legislation, we go down a path that is harmful to our economy and harmful to our national security. Don't take it from me. Federal Reserve Chairman Ben Bernanke told Congress last week on more than one occasion that cuts of this size made this quickly would hurt hiring and incomes, slow the recovery, cost the economy 750,000 jobs, and keep deficits larger than otherwise.

Why are we in this place? We're in this place because the Republicans have said that they would not close any tax loopholes except to lower rates--not to lower the deficit, but to lower rates. Because they will not close any loopholes to reduce the deficit, we have to reduce the deficit in other ways.

For example, they will not close the loophole for tax breaks for corporate jets. Instead, they want to cut 4 million Meals on Wheels. Instead of closing loopholes for Big Oil, they want to cut investments in little children's education. Instead of closing tax loopholes for corporations that send jobs overseas--that's my personal favorite, tax cuts for corporations that send jobs overseas--they want to lose 750,000 jobs here in our country. Instead of ensuring that millionaires and billionaires pay their fair share, our military readiness will be impaired and health care for our military families could be cut.

On a personal basis, we have teachers educating children of our military families who will be harmed by this. We have psychiatric nurses who meet the needs of our returning vets with PTSD and other challenges who may be furloughed because of this. What do we say to them? Oh, it's more important for us to have loopholes for tax breaks for corporate jets and millionaires and billionaires to send jobs overseas and the rest of it?

We had an opportunity to today in our previous question to bring to the floor the proposal advanced by Mr. Chris Van Hollen, our ranking member on the Budget Committee. Mr. Van Hollen's proposal is responsible and fair and it is balanced. It cuts spending responsibly. It ends unnecessary tax breaks for special interests, some of which I just named, and advances the Buffett rule, ensuring that millionaires pay their fair share.

I mention it because it's yet, again, another time where the Republicans on at least four occasions shut down the opportunity to debate an alternative to what the Republicans are proposing. And this is on top of all that we've already agreed to.

Many of us in a bipartisan way voted for the Budget Control Act, which cut $1.2 trillion in spending. That was in addition to over $300 billion already cut last year. That is in addition to the President and Members of Congress saying we are prepared to make further cuts in waste, fraud, and abuse. And some things are not wasteful. Maybe they're just not a priority anymore or we found a better way to do it. Maybe they're duplicative or obsolete. But, nonetheless, we can't afford them anymore.

So let's subject every dollar to harsh scrutiny; but we also have to subject to scrutiny all the spending on these tax breaks, because that is spending. When you give a subsidy to Big Oil of $38 billion as an incentive to drill, you are spending the taxpayers' dollars. Let's cut that spending, too.

Now, what's interesting about this is that, in what the Republicans are supporting, they are totally out of sync with the American people. Republicans across our country are opposed to the corporate jet loophole. They want to close the corporate jet loophole. And Republicans, by majority, support that. They want to eliminate oil and gas tax breaks. Republicans, by majority, support eliminating that. Republicans across the country say we should limit deductions for millionaires and billionaires. Republicans, of course, say we should end tax breaks for corporations to send jobs overseas. The list goes on.

Republicans, by majority, support the Buffett rule. Even some Republicans in the Senate say we must look at closing some of these loopholes--not just to lower rates for corporate America, but in order to lower the deficit--instead of going to our children, our seniors, our workers and all the rest to make those cuts.

So we are in a situation here today that is created not because the Republicans passed two bills last year. I know the gentlemen speaking on the floor know that last year is over. That Congress has ended. Those bills have no weight. The spending cuts that we agreed to last year are for over 10 years.

The bills that the Republicans passed last year ended at the end of the last

Congress. How to make a law? Just read the book. I realize that you would hardly recognize that civics lesson if you see what's happening on the floor here today and over the last period of time.

But I have enormous, enormous respect for the chairman of the Appropriations Committee. We sat on that committee together for a number of years. I appreciate that he wanted to bring a bill to the floor that honors the Budget Control Act.

I disagree with the tactic of putting a reinforcement of a sequester into law. It exists. We have to do the sequester unless we can head it off, unless the safety of our troops and their training, our national security, the education of our children, the safety of our neighbors, unless that takes precedence over protecting tax breaks for corporate jets, businesses that send jobs overseas--the list goes on, and I have mentioned it now more than one time.

So I urge my colleagues to think carefully about this vote. This isn't a vote to shut down government or not. That vote will come at another time.

The Senate isn't going to accept this bill. The Senate is not going to accept this bill. When they don't, they will send back another bill. And we'll just see how many votes are on the Republican side to keep government open, because we have absolutely no intention of having the government shut down. We will just see how many Republican votes there are for that, for a bill that will be a better bill than this.

Although, with the threat of sequester and what that will do to our economy--and our job creation and our reducing of the deficit--that's one thing; but think of what it does in the lives of those 4 million meals not delivered to seniors. Think of those seniors who are not getting those meals, those children who are not getting Head Start--or even beyond Head Start, the education of our children. Some of them are being educated by teachers who are teaching children of military families who will now have to lose their jobs or be furloughed. This has an impact right to the kitchen table of the American people. So we have to think very seriously about what we are doing here. But whatever we do, let's just have it be on the level, Mr. Speaker. Let's have it be on the level.

This is a bill that reinforces the sequester; if it didn't, it wouldn't be in the bill. So this bill, I think, has no merit, and it will not have my support.