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House puts firewalls vote on ice.

The House Democratic leadership last week deferred House consideration of the 'Firewalls' bill, HR 3732, at least until this week as reactions from the House bank scandal appeared to harm chances for an early and successful vote.

The bill would put all discretionary spending - defense, domestic, and foreign aid - under a combined spending cap, eliminating the current artificial walls prohibiting savings in any one area from being used in another. Under the 1990 budget agreement, these walls are scheduled to self destruct on October 1, 1993. HR 3732 would remove them effective October 1, 1992.

Passage would permit nearly $7 billion in savings from defense cuts to be reinvested in priority municipal programs - including CDBG, highways, housing, and public transportation - and $5 billion in federal deficit reduction. Failure to approve the bill will mean a $6.4 billion cut in federal spending for domestic priorities next year.

The firewalls bill, if passed, would have no impact on the federal deficit. It would simply eliminate the artificial walls separating foreign aid from defense from domestic discretionary spending programs - meaning that savings in any one area could be transferred to another or used for deficit reduction. Under no circumstances could total spending exceed the combined amount permitted under the three, capped areas.

Last week both House and Senate Republicans announced willingness to negotiate a deal on the firewalls legislation; however, the way they want to negotiate would be to extend the firewalls beyond their scheduled extinction date of October 1, 1993. The Democrats have shown little interest in such a deal as yet.

The White House has similarly indicated it is willing to negotiate - in return for the imposition of a cap on entitlement programs. There is, however, little chance of a cap on entitlement programs in an election year.

The check bouncing investigation in the House and intense lobbying by President Bush to defeat the NLC top priority bill have had an impact. Many members who are trying to explain their checking account records are afraid that a vote to break the firewalls will be associated with a failure to be fiscally disciplined.

Options for Cities & Towns

The leadership is considering one of one options to deal with member concerns:

* Amend the bill to put a lower cap on defense spending and a higher cap on domestic discretionary spending:: This would reassure those members with military bases or major defense contracts in their districts of downside protection; or

* Amend the bill to require that 50 percent of any defense savings be used for deficit reduction, 50 percent for domestic discretionary.

The first change would address the fear that eliminating the firewalls would lead to much bigger defense cuts, impacting more jobs before November.

While the administration has adamently opposed using any defense savings for investment in American communities, it has made clear its support for using the same savings to pay for the President's proposed middle income tax cut.

NLC members encountered opposition in the House to the bill of two kinds: those who claim they want every dollar of defense savings invested in deficit reduction, and those who are worried about defense cuts affecting military bases or defense contracts in their Congressional districts.

The vote in the House will give every municipal official an opportunity to see what their respective Representative's priorities are and to hold them accountable.
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Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Mar 23, 1992
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