LEGISLATIVE UPDATES AND NEWS

Second Session of the 112th Congress Underway

The full House met briefly this week before adjourning on Wednesday. They will be back, along with their Senate counterparts early next week. Several key issues will take center stage during the first few weeks of the second session of the 112th Congress return. They include raising the nation’s debt ceiling; another “tax-extenders” package containing the tax holiday, unemployment insurance, and a “Doc Fix” addressing Medicare & TRICARE’s reimbursement rate for doctors; and minimizing or eliminating the deep cuts in defense spending directed by the last year’s budget accord.

Last week, President Obama asked Congress to raise the debt ceiling by $1.2 trillion. This would boost the debt ceiling to $16.4 trillion and is believed to be enough to allow the government to keep borrowing through 2012. The House on Wednesday passed a resolution expressing their disapproval with the President’s plan for another hike in the debt ceiling. The Democratic-led Senate is likely to be more supportive of another increase, setting the stage for another funding-related battle between the two chambers. Congress last agreed to raise the debt limit by $500 billion in September of last year.

The tax extension legislation consumed considerable time during the final days of the first session of the 112th Congress. Two days before Christmas, Congress agreed to a two-month deal that expires at the end of February. Lawmakers are now working on a new package to cover the remainder of the year. Confidence is high they can complete this by the February 29 deadline. As reported, our interest here lies with rates paid to doctors who treat Medicare and TRICARE patients. Without additional congressional action, the previously delayed 27 percent cut in payments would occur on March 1. That could translate into access problems for beneficiaries if doctors limit the number of patients they see who use these two programs.

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LEGISLATIVE UPDATES AND NEWS

New National Defense Strategy Announced

Last Thursday the President laid out plans for a leanerU.S.military during a Pentagon press conference. The Administration’s new strategy moves away from the two-war standard that has been in place since the end of the Cold War, greatly reduces military personnel levels and reorients the military toward the Asia-pacific Theater of operations.

The underlying goal of the new strategy is to reduce overall defense expenditures. The eight page report, entitled, Sustaining U.S. Global Leadership: Priorities for the 21st Century is driven by the need to cut nearly $490 billion from defense spending through 2021, including about $261 billion through 2017. It does not provide specifics on exactly how DoD intends to carry out these cuts; that part of the plan should become clearer when the President releases his budget proposal to Congress in early February.

Secretary of Defense Leon Panetta and Chairman of the Joint Chiefs, General Martin Dempsey accompanied the President when he made his announcement. According to Secretary Panetta, four overarching principles guided their deliberations in preparing the report: To maintain the world’s finest military, one that supports and sustains the unique global leadership role of the United States; to avoid hollowing out the force– a smaller, ready, and well-equipped military is preferable to a larger, ill-prepared force that has been arbitrarily cut across-the- board; that savings must be achieved in a balanced manner with everything on the table, including politically sensitive areas that will likely provoke opposition from parts of Congress, industry, and advocacy groups; and to preserve the quality of the All-Volunteer Force and not break faith with our men and women in uniform or their families. In a prepared statement, Secretary Panetta said “There is no question that we have to make some tradeoffs, and that we will be taking on some level of additional but acceptable risk in the budget plan we release next month. These were not easy choices.”

Later in his statement, Panetta addressed the men and women in uniform and the civilian employees who support them. You have done everything the country has asked you to do, and more. “You have put your lives on the line, and fought to make our country safer and stronger. I believe this strategic guidance honors your sacrifices and strengthens the country by building a force equipped for the future. I have no higher responsibility than fighting to protect you and your families, just as you have fought and bled to protect our country.”

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LEGISLATIVE UPDATES AND NEWS

Short-term “Doc Fix”

Less than 48 hours before Christmas, lawmakers agreed to a two-month plan that prevented higher tax rates, delayed a 27 percent cut in payments to doctors who treat Medicare and TRICARE patients (“Doc Fix”), and extended unemployment insurance programs. The agreement lasts through February and efforts to come up with a longer-term agreement will likely capture much of Congress’ attention when it returns later this month. Although both chambers have appointed members to a conference committee charged with hammering out a long-term deal, there is no reason to believe these negotiations will be any easier than those seen in recent months, primarily because neither party can agree on how to pay for the measure. We will keep an eye on their progress and provide updates as information becomes available.

FY 2012 NDAA Now Law

President Obama has signed into law, H.R. 1540, the Fiscal Year 2012 National Defense Authorization Act (NDAA). As we have reported, the bill contains several important provisions, among them, authorization for a 1.6 percent military pay raise and extension of many special pays and bonuses. The President attached to the bill a not-oft-used signing statement that expresses his concerns with certain provisions contained within the measure. “The fact that I support this bill as a whole does not mean I agree with everything in it,” the President said. “In particular, I have signed this bill despite having serious reservations with certain provisions that regulate the detention, interrogation, and prosecution of suspected terrorists… Ultimately, I decided to sign this bill not only because of the critically important services it provides for our forces and their families and the national security programs it authorizes, but also because the Congress revised provisions that otherwise would have jeopardized the safety, security, and liberty of the American people.” As regular readers of On Call know, the terrorist custody issue proved to be extremely controversial in 2011, impeding the NDAA’s passage for months. Lawmakers reworded and “tweaked” that language several times in order to gain the approval of the President and many lawmakers.

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