Summary & Background
On July 30, 2009, the Senate is expected to begin consideration of H.R.3357, to Restore Sums to the Highway Trust Fund and for Other Purposes. The legislation passed in the House on July 29 by a vote of 363 to 68.
Economists and industry experts believe that in the coming weeks, the Highway Trust Fund, Federal Unemployment Trust Fund, and the Federal Housing Administration (FHA) and Government National Mortgage Association (GNMA) will face funding shortfalls that could result in the loss of nearly 240,000 jobs, 4.6 million American losing unemployment insurance benefits, and a tightening of the mortgage-lending market.
The Highway Trust Fund reimburses States for critical highway project spending; in the absence of those funds, states would likely scale back their projects and cut jobs. The Unemployment Trust Fund loans money to States to ensure they are able to meet their obligation to provide unemployment insurance Americans out of work due to the current economic crisis. Moreover, FHA and GNMA are playing an increasingly critical role in the effort to stabilize and jumpstart the nation’s housing market as the private lending industry has contracted. FHA backed loans have gone from comprising 3 percent of the mortgage market to comprising 25-30 percent of the market, and GNMA, which securitizes FHA and Department of Veterans Affairs loans, has seen its volume increase threefold. Due to increased demand, FHA and GNMA are approaching their loan limits; if reached, the entities would be unable to provide first-time mortgage and refinancing loans and the mortgage market would constrict further.
In an effort to avoid shortfalls in these areas — all critical to the nation’s economic recovery – H.R.3357 would:
1) transfer $7 billion to the Highway Account of the Highway Trust Fund to ensure the continuation of state highway projects;
2) provide funds to the Federal Unemployment Fund for the purposes of repayable advances to States in an effort to ensure the availability of unemployment benefits for the nation’s out of work workers; and
3) increase the mortgage commitment authority of the Federal Housing Administration (FHA) and the Government National Mortgage Association (GNMA) to ensure continued mortgage lending and the recovery of the housing market.
Under a consent agreement, several amendments are expected to be in order to H.R.3357. Following the disposition of these amendments, the Senate is expected to vote on final passage of the legislation.
Section 1. Funding of the Highway Trust Fund. H.R.3357 would transfer $7 billion from the General Fund to the Highway Trust Fund.
Section 2. Advances to the Unemployment Trust Fund and Other Funds. H.R.3357 would amend Fiscal Year 2009 appropriations for the Department of Labor to provide “such sums as may be necessary” to the Unemployment Trust Fund.
Section. 3. FHA Mortgage Insurance Commitment Authority. H.R.3357 would amend Fiscal Year 2009 appropriations for the Federal Housing Administration (FHA) to increase their loan commitment level from $315 billion to $4oo billion.
Section 4. GNMA Mortgage-Backed Securities Guarantee Commitment Authority. H.R.3357 would amend Fiscal Year 2009 appropriations for Government National Mortgage Association (GNMA) to increase their commitment authority from $300 billion to $400 billion.
On July 29, 2009, the House passed H.R.3357, to Restore Sums to the Highway Trust Fund and for Other Purposes, on a vote of 363 to 68. The Senate is expected to consider and vote on the legislation on July 30.
Four amendments are expected to H.R.3357:
1) S.A. 1904, the Bond amendment to repeal section 10212 (rescissions) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU);
2) S.A. 1905, the Ensign amendment to offset the appropriation of funds to replenish the Unemployment Trust Fund with funds from the American Recovery and Reinvestment Act of 2009;
3) S.A. 1906, the DeMint substitute amendment to offset the appropriation of funds in the bill with funds from the American Recovery and Reinvestment Act of 2009; and
4) S.A. 1907, the Vitter amendment would give the Director of the Office of Management and Budget the authority to transfer funds from the American Recovery and Reinvestment Act of 2009 so that the Highway Trust Fund balance does not fall below the threshold that would require payment changes from daily to weekly or biweekly through March 31, 2011.
The Congressional Budget Office (CBO) estimates that H.R.3357 would have virtually no budgetary impact: 1) the transfer to the Highway Trust Fund would not increase total spending or the deficit; 2) advances to the Unemployment Trust Fund would have no budgetary impact; 3) the increase in FHA commitment authority would have no budgetary impact; and 4) the increase in GNMA commitment authority will actually raise $40 million. At this time, the CBO estimate can be accessed within the Senate firewall here. It is expected that CBO will publish the estimate on its website later today.
At the time of this writing, no Statement of Administration Position has been issued for H.R.3357.