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President to President
Molly Corbett Broad's weekly email newsletter to higher education leaders.

President to President, November 22, 2011

Vol. 12, No. 43


  • Super Committee Fails to Agree on Deficit Plan
  • Higher Education Groups Express Concern With DoD Tuition Assistance MOU

After the financial markets closed yesterday, the chairs of the Joint Select Committee on Deficit Reduction announced they had "come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline."

The failure of the so-called Super Committee will trigger $1.2 trillion in cuts beginning in January 2013—$600 billion from defense and $600 billion from other areas with the exception of a few programs like Social Security and Pell Grants.

However, the immediate impact will also be considerable, to the tune of almost $500 billion, according to available estimates. With apologies to T.S. Eliot, the Super Committee's tenure will close not with a whimper, but with a bang.

The reason is that the Super Committee proposal was the legislative vehicle to renew several expiring provisions. Right now, there is no alternative proposal. Therefore, on Jan. 1, 2012, four things will happen:

  • The 2 percent payroll tax credit on Social Security taxes for individuals will expire.
  • Unemployment benefits for the long-term unemployed will be terminated.
  • The physician reimbursement rate for Medicare services will fall by 30 percent.
  • The patch for the Alternative Minimum Tax (AMT) will expire.

The impact of the first three items will be felt immediately, though the effect of the AMT change won't be felt until those who are subject to it—mostly middle-income earners—file their 2012 taxes in early 2013.

There will likely be a legislative proposal to address some or all of these issues before the end of December, though at this time, it is unclear what it might look like. Moreover, given the poisonous political atmosphere, it is difficult to imagine anything of such scope and cost being enacted.

In addition to attempting to deal with these four issues, Congress will try to enact the nine remaining appropriations bills for FY 2012 before adjourning for the winter holidays. If they cannot complete these bills, another temporary spending measure will be necessary to keep the government running.

In March of this year, the Department of Defense (DoD) issued new requirements for institutional participation in the tuition assistance (TA) program for active duty service members.

Under the new rules, institutions will be required to sign a new Memorandum of Understanding (MOU) prior to Jan. 1, 2012, in order to maintain their eligibility to continue participating in the program.

Despite a strong interest in continuing to assist service members through the TA program, several institutions have raised concerns with the MOU's provisions. For the past several months, ACE has led an effort to address these issues with DoD to make it possible for all institutions to sign the MOU. We sent a letter yesterday to Defense Secretary Leon Panetta requesting he withdraw the MOU and reopen a discussion about ways to modify the document to better serve its intended purposes. If the process for making changes to the MOU cannot be completed before Jan. 1, 2012, we asked he consider delaying the implementation date as necessary. We also requested he provide an exception to allow certain institutions with a relatively limited number of TA participants to continue in the program without a signed MOU.

Note that the MOU applies only to active duty service members and not to GI Bill beneficiaries.

Best wishes to you and your family for a happy, restful Thanksgiving. President to President will return after the holiday.

Molly Corbett Broad
President of ACE