Federal Budget & Tax

Federal Budget & Tax: News Blog Background

Wednesday, September 28, 2005

Senate Majority Leader Bill Frist (R-TN) will call on President Bush today to give Congress a list of offsets to potentially make up for spending related to Hurricane Katrina. This request is partially based on the fact that Katrina spending has conservatives in both chambers of Congress worried about how this recovery spending will affect the nation's deficits.

Frist will also apparently call on the President to do a formal Budget Act "rescission request" that would temporarily -- and possibly permanently -- suspend some federal spending to help pay for Katrina relief. According to an aide, Frist did not provide details on possible dollar figures, either for the offsets or the rescission request. Under the Budget Act provision (which is also known as impoundment authority) the White House can temporarily suspend federal spending for up to 45 days of "continuous session," typically 60 days from the date of the request. Suspending regular spending to deal with the cost of Katrina is neither responsible nor is it necessary. Yes, Katrina spending will add to our deficit, but the deficit can be brought down by a combination of responsible spending cuts and phasing out (or repealing) certain tax cuts. Frist's "responsible" call for a suspension on spending leads one to wonder where he and other prominent GOP leaders were when Bush passed trillions of dollars worth of tax cuts in 2001 and 2003.

Posted by Becky Lewis, 05:29:09 PM

End of Fiscal Year Approaching

Fiscal year 2005 ends this Friday, Sept. 30, and House and Senate Republican leaders have not been able to pass all spending bills for FY 2006 on the floor. Thus, we can expect them to pass a stop-gap funding bill to cover federal government spending by the end of the week.

According to an aide, GOP leaders in both chambers will push through a CR to fund government programs through Nov. 18. While some believe this extension will give appropriators sufficient time to wrap up their work on the outstanding FY 2006 appropriations bills, others think GOP leaders will not make their ambitious goal to pass all of the bills as separate measures this year. While the House has passed all eleven of its spending bills, the Senate has only passed eight of twelve, and only two of those have been given final approval and sent to Bush for his signature.

Posted by Becky Lewis, 12:41:51 PM

Tuesday, September 27, 2005

Calls for Fiscal Sanity Grow Louder

Amid misguided and mostly rhetorical proposals for cutting other areas of the budget to pay for Katrina relief (while continuing to cut taxes further), there is a strong and growing number of media outlets, political leaders, policy experts, and regular citizens who are demanding fiscal sanity return to the nation's capital.

USA Today, the paper with the country's largest circulation, joined the ranks of those calling for a reassessment of the president's tax cuts. The paper specifically called out those lawmakers whose support of reckless tax and budget policies have caused many of the fiscal problems we have today. The paper editorialized:

The current hypocrisy is that lawmakers who participated in the spending, borrowing and tax-cutting binge that put the nation in hock are now clamoring for spending cuts to offset storm costs...Their case would also be stronger if they would be willing to revisit recent tax cuts. The first law of holes is: When you're in one, stop digging. It would be the height of irresponsibility, for instance, to cut estate taxes when natural disasters, the Iraq war and surging health care costs are exploding the deficit.

Posted by Adam Hughes, 03:31:45 PM

Friday, September 23, 2005

FEMA Report Vague on how Money is Being Spent

By law, the Secretary of Homeland Security must provide Congress with weekly reports detailing how FEMA is spending Katrina relief funds. The first report was sent to Congress September 15, and the second was sent yesterday. According to Rep. David Obey (D-WI) -- ranking member on the House Appropriations Committee -- the second report sent to Congress has virtually no details in it, much like the first report.

Obey said, "We asked for specific information on how they are awarding contracts and who contracts are going to. Instead of telling us who is doing what and how, we got a few spreadsheets." In order to get spending details, Obey and Senate ranking member Robert Byrd (D-WV) had specifically sent a letter to the OMB. Their requests, however, were not heeded, and their letter never answered. Instead of knowing how the money is being spent, Obey said, "We don't know what the administration is doing because they don't know what they are doing. We don't know where the nearly $16 billion FEMA's allocated went, we don't know what they're planning to do with the $44 billion they've got left."

Posted by Becky Lewis, 04:52:59 PM

2001 & 2003 Tax Cuts to Cost $225 Billion This Year

In an op-ed in today's Washington Post, E.J. Dionne, Jr. notes that although Republicans claim to be fiscally conservative, "our federal purse strings are in the hands of fiscal radicals." Spending in the aftermath of Hurricane Katrina does have lawmakers on both sides of the aisle worried about potentially massive deficits. Some have been claiming a desire to take a fiscally responsible approach to spending, however cutting budgets while ignoring the costs of tax cuts is, in the long-run, not fiscally responsible at all.

As was posted yesterday in the blog, members of the House Republican Study Committee proposed drastic funding cuts in order to offset Katrina spending; cuts that would -- as Dionne said -- take "$80 billion from Medicare and $50 billion from Medicaid over five years and suggest reductions in school lunches, rent subsidies for the poor and foreign aid, among other things." He goes on to point out, however, that the amount of money the 2001 and 2003 tax cuts is costing our country this year alone amounts to $225 billion -- which could more than cover the expected costs of dealing with Katrina.

It doesn't, however, look like the Republican leadership is interested in pursuing this route to offset the costs of Katrina. Yesterday Bush pledged to join in on efforts to identify cuts elsewhere in the federal budget that can offset the expenditures for disaster aid, saying "I'm going to work with Congress to prioritize what may need to be cut." Cutting programs is the opposite of what needs to be done. In fact, many are arguing that a perpetual underinvestment in the infrastructure of our country is what allowed this disaster to spiral so radically out of hand in the first place.

Posted by Becky Lewis, 02:52:41 PM

Senate Completes Work on Two Approps Bills

The Senate passed two approprations bills yesterday to fund discretionary programs for FY 2006. The FY 2006 budget proposal for the Agriculture Department was voted on and passed 97-2. The bill includes $17.348 billion in discretionary spending and $82.81 billion in mandatory spending (total $100.158 billion). This amount was $506 million over the House's mark and the $597 million over the president's request.

The Senate also passed their mark for the Military Quality of Life/Veterans Affairs Bill, recommending that $85.2 billion be appropriated for FY 2006. The House recommended the same amount of funding when they passed their mark in May, surpassing the President's request by $1.1 billion.

Posted by Becky Lewis, 12:31:45 PM

Thursday, September 22, 2005

GOP Uses Katrina As Excuse To De-Fund Government

The Republican Study Committee (RSC), a conservative group of House Republicans, has released a 24-page proposal they are (not so) cleverly calling "Opperation Offset," which details $500 billion in budget cuts they are proposing to reduce the overall cost of Katrina relief and reconstruction. The proposal has created friction among Republicans in Congress because the RSC wants to institute cuts that rehash policies they have promoted for years, including significant cuts to NASA, Amtrak subsidies, the Corporation for Public Broadcasting, the Peace Corps, foreign aid, the Earned Income Tax Credit, the national park system, community health centers, agricultural subsidies, and many, many more. Other Republicans believe proposals making up the majority of the cuts, such as delaying the Medicare prescription drug benefit by one year or repealing earmarks in the recently passed transportation bill are not realistic and might divide conservatives and moderates.

Republican Party politics aside, this proposal is indicative of the "starve the beast" mentality that promotes huge tax cuts and then severe budget cuts to balance the budget. The result, unfortunately, is a dramatically decreased ability of the government to invest in communities and infrastructure. As was seen after the hurricane, these cuts do have consequences. The RSC's policies promote a short-term goal of shrinking government instead of a long-term investment agenda that will make the country more secure.

Posted by Adam Hughes, 10:33:25 AM

Wednesday, September 21, 2005

More On Cost of Rebuilding; Congress Passes Tax Bill

Many Republican leaders in the House and Senate are worried about the costs of rebuilding after Katrina, even though President Bush has promised, and rightly so, to devote all the funds needed to help the devastated region. Republicans who are worried about excessive deficit-financed spending are pushing for the costs will be offset (most are suggesting by cutting the budget elsewhere). To appease them, OMB Director Josh Bolten said Tuesday that the administration would consider offsets, but did not offer any details about what would be cut and by how much. As Stan Collender correctly points out (subscription required), any offsets proposed by the administration would to little, if anything, to reduce the amount Katrina relief spending will add to the deficit, and the national debt. Because President Bush refuses to even consider not extending or rolling back some of his first term tax cuts, it will be future generations who will be paying for reconstructing the Gulf Coast.

The federal government is required by law to pay at least 75 percent of the cost of rebuilding public infrastructure after a disaster (1988 Stafford Act). To comply, Congress -- besides approving about $64 billion in emergency spending -- has agreed on a tax-relief bill to expand deductions this year for victims. The final bill was scored by the Joint Committee on Taxation as costing $6.1 billion over 10 years. Congress hopes these targeted tax cuts will spur employment of low-income workers on the Gulf Coast.

In addition, President Bush signed three bills today to help in the aftermath of the disaster. The bills waive Pell Grant and other federal student loan requirements for displaced college students and expand Temporary Assistance to Needy Families eligibility for victims.

CNN.com: House Passes Tax Breaks for Hurricane Katrina Victims

Posted by Becky Lewis, 12:08:19 PM

Tuesday, September 20, 2005

Watcher: September 20, 2005
Federal Budget

Posted by Becky Lewis, 04:19:33 PM

Monday, September 19, 2005

House GOP Reps Urge Bush to Cut Budget Further

Last week, twenty-one Republican members of the House sent a letter to President Bush, in which they urged him to cut non-defense discretionary spending to offset additional spending dealing with the hurricane aftermath. The letter said, "Congress and the President have a historic opportunity to show the American people that we are not afraid to make hard choices on cutting current federal spending when a national disaster requires investment of tens, possibly hundreds, of billions of dollars."

Cutting spending elsewhere in the budget, most likely for supports and programs benefiting low-income Americans is certainly not a hard choice for Congress as they continue to push the completion of reconciliation bills cutting entitlement spending simply to offset the cost of new tax cuts or the rich. Perhaps Congress and President Bush should be sincere in their claims to be able to make hard choices and call upon those Americans who can best afford to pay to shoulder just a tiny bit more of the burden through choosing not to pass new tax cuts for the wealthy this year. Cutting non-defense discretionary programs to pay for emergency hurricane relief funding is akin to robbing Peter to pay Paul and continues to concentrate the burden on low- and middle-income Americans.

Also, Reps. Hensarling and Flake, members of the conservative Republican Study Committee, sent a letter to Speaker Dennis Hastert and Majority Leader Tom DeLay, in which they suggested that the 2006 implementation of the Medicare prescription drug benefit be delayed in order to contain costs, which are expected to sky-rocket with all of the post-Katrina spending. In reality, though, these costs should be dealt with by promoting an agenda based on shared sacrifice -- not on cutting money further from the budget so that people don't have access to the services they rely upon. It's time the President to call for a renewal of shared sacrifice in rebuilding the Gulf Coast through our tax code.

Posted by Becky Lewis, 06:18:24 PM

Aspen Institute: Charities Will Lose With Bush Budget

Congressional GOP leaders and the administration have, since Katrina hit, made a point of singling out charitable organizations and nonprofits for the important role they play in helping people in need. President Bush, in his address to the nation Sept.15, said, "I ask the American people to continue donating to the Salvation Army, the Red Cross, other good charities and religious congregations in the region." Bush, and other Congressional leaders, however, are undermining the abilities of the charitable sector to effectively provide help by continuing to push forward with budget cuts that harm nonprofits, as well as push for repeal of the estate tax, which would have adverse effects on nonprofits and the charitable sector as well.

Federal budget experts at the Aspen Institute have found in a recent report that FY '06 federal budget proposals reflect a trend of shifting responsibility for a number of social programs from the federal government towards the charitable sector.

In The Nonprofit Sector and the Federal Budget: Fiscal Year 2006 and Beyond, they found that the budget proposed by Congress would cut funding for programs of interest to nonprofit groups by $40 billion between FY '05 and FY '10. The President's budget proposal is even more harmful; it would cut these same programs by $71.5 billion over the time period.

Posted by Becky Lewis, 05:57:29 PM

The Costs of Rebuilding

In his remarks to the nation Sept. 15, President Bush said the federal government would be responsible for "the great majority" of the costs of repairing public infrastructure in the Gulf Coast. Government spending in the aftermath of the disaster could reach proportions not seen since the country was hit by the Great Depression, and many are predicting spending could top $200 billion.

Economic analysts are predicting the deficit for FY 2006 could easily out-do the record deficit of $412 billion reached last year. Deficit spending is not always necessarily harmful; in fact if done correctly it can serve to revitilize regions of the country all while spreading the cost over a number of years. However, the problem with extreme deficit-financed spending right now is that the government will be borrowing all while continuing to uphold -- and push for more -- tax cuts for the rich. As this New York Times editorial points out, "The problem is that the United States was deep in hock before Katrina." The fact that tax cuts are on the agenda as well as massive spending is "breaking the bank for our descendants, while impairing our ability to borrow responsibly today."

If the government plans on taking a fiscally responsible approach while spending "unprecedented amounts" in the aftermath of Katrina, they will need to cease pursuing tax cuts for the wealthy by allowing the dividends and capital gains cuts to expire in 2008 (instead of extending them), and they will also need to suspend some tax breaks scheduled to go into effect in 2006 (for more on this, see this CBPP report). The priorities of the administration and Congress need to change, or else current and future tax payers can expect to be hit with a large bill -- a bill either in the form of higher taxes and/or severe cuts in government programs.

Posted by Becky Lewis, 12:11:20 PM

Friday, September 16, 2005

What About Taxes?

Last night President Bush unveiled his initial ideas about plans for reconstruction of the Gulf Coast in the aftermath of Hurricane Katrina. The president did not mention how much he expected this to cost, how he thought the country should pay for it, or what sacrifices he expected citizens to make to help out with the efforts. Congress has already approved over $60 billion for emergency relief efforts, with another emergency supplemental expected sometime in October. The large amount of existing spending plus vague, but potentially costly plans for reconstructions has some members of Congress once again worried about deficits.

Before the president addressed the nation last night, fiscally conservative members of the House and Senate held a press conference with government watchdog groups asking the President to reign in federal spending for Gulf Coast states decimated by Katrina. Sens. Tom Coburn (R-OK), John McCain (R-AZ), Jim DeMint (R-SC), and Rep. Mike Pence (R-IN) led the calls for fiscal restraint. Sen. McCain stated, "We know this is a huge bill and we don't want to lay it on future generations and Speaker of the House Dennis Hastert (R-IL) commented after the president's speech, "for every dollar we spend on this, it is going to take a little bit longer to balance the budget."

But cutting relief and reconstruction efforts, or other parts of the budget is not the right answer. It is budget cuts and underinvestment that played a part in making the impact of Katrina so much worse along much of the Gulf Coast. If those conservatives are truly concerned about balancing the federal budget and not passing on debts to future generations (and not simply shrinking the size of government), they need to look at more than simply reducing federal spending - they need to reconsider the incredible number of tax cuts passed over the past five years that have driven government revenues to its lowest level in 50 years. Countless projections and estimates (see here, here, here, and here) show the combination of massive tax cuts and current policies leading to decades of unsustainable, deep, and persistent deficits. In order to truly address consistent budget deficits, and to pay for not only the relief and reconstruction efforts in the Gulf Coast, but also long-term preventative investments in the infrastrucure and people of America, the President and Congress must reverse some of the tax cuts passed over the past five years.

Posted by Adam Hughes, 04:01:34 PM

Wednesday, September 14, 2005

Grassley Says Estate Tax Repeal Would Be "Unseemly"

Chairman of the Senate Finance Committee Charles Grassley (R-IA) commented today that repeal of the estate tax given current conditions -- and the number of people in obvious need -- would be "unseemly." He said in a conference call with Iowa reporters, "It's a little unseemly to be talking about doing away with or enhancing the estate tax at a time when people are suffering." He went on to say he doubts repeal of the tax will be considered in 2005.

These comments seem to be contradictory to what was posted here earlier today regarding Sen. Jon Kyl's desire to move forward with an estate tax vote. Only time will tell what the Senate will actually have to time to pursue this fall. While repeal of the estate tax would be harmful at any time, it is at least reassuring to have a Congressional GOP leader such as Grassley recognize (and verbalize) that now is simply not the time to be cutting taxes for the wealthy.

Posted by Becky Lewis, 05:00:21 PM

Tax Reform Panel to Report in Late October

Treasury Secretary John Snow announced yesterday that the President's Advisory Panel on Tax Reform will delay its tax report until the end of October. This delay apparently comes at the request of the administration, who Snow said is concerned that a sooner release would doom it to the "back pages" of newspapers because of the extensive coverage we are currently seeing with Hurricane Katrina aftermath. Another Treasury spokesman said that with such a full agenda, "there is little capacity for public focus on the full debate and dialogue that this key presidential priority deserves."

While finding ways to reform the tax code is important, it is hard to tell if the panel and their work is going to have any impact whatsoever. Not much information is available regarding what exact recommendations they are supposed to make to the Treasury Department. The panel has been extremely vague about their actions; in their emails announcing meetings they say they will be discussing "issues surrounding tax reform," and rarely do they delve much deeper than that. BNA has reported that Snow expects they will work to fix the laws relating to the alternative minimum tax, but few other policy priorities are known.

We will see with the release of the report in October what exactly the tax panel has in mind. After that, it will be up to Congress and the President to find the time to even make tax reform a priority, or else this panel's report will do little more than collect dust.

Posted by Becky Lewis, 03:53:24 PM

Kyl Wants To Push Ahead With Estate Tax Vote

Sen. Jon Kyl (R-AZ) told reporters he is still set on moving ahead with an estate tax vote. He is hoping the vote, which was originally scheduled for September 5, will take place in October.

Some Congressional GOP leaders have come under fire as of recently for voicing their desires to move ahead with tax cuts, or votes on tax cuts, during a time when so many poor people are so obviously in need of help via a social strong safety net. Repealing the estate tax would essentially give billions of dollars back to the wealthiest in our society and gut national revenue, rather than help the poor. Even so, Kyl has said he wants to hold a vote "to determine whether or not the votes are there for permanent repeal.... That hasn't changed."

Sen. Max Baucus (D-MT), who has been the lead estate tax negotiator for the Democrats, has pulled out of compromise negotiations with Kyl. Without a compromise, Kyl has proposed tying the estate tax rate to the 15 percent rate on capital gains and dividends and raising the exemption to $8 million. Read this Center on Budget and Policy Priorities report outlining how this "compromise" would, in reality, end up being little better than full repeal.

Posted by Becky Lewis, 12:54:42 PM

Tuesday, September 13, 2005

Medicaid Package for Hurricane Victims Will Help For Now

Finance Committee Chairman Charles Grassley (R-IA) and ranking member Max Baucus (D-MT) are planning to introduce a health care package to assist victims of Hurricane Katrina. The package will expand Medicaid eligibility and provide 100 percent federal reimbursement for Medicaid coverage to states who have seen an influx of displaced persons.

Baucus said new Medicaid provisions were needed to provide health care to victims who have lost homes and jobs. The devastation from Hurricane Katrina has plunged thousands of people into unemployment and poverty, resulting in a huge increase in the number of people who are now eligible for Medicaid. At the same time, hospitals and clinics -- especially in the south -- are being flooded with people in need of medical care, which is putting a growing burden on the already-fragile public health infrastructure of many major cities.

Well before this natural disaster took place, hospitals and clinics across the country struggled to take care of local patients who didn't have insurance to cover all medical costs. Congress, in fact, included instructions in the budget resolution for $10 billion to be cut from mandatory programs under the jurisdiction of the Senate Finance Committee (like Medicaid).

While the date for reconciliation has been pushed back, Majority Leaders Bill Frist (R-TN) and other Congressional GOP leaders are saying they want to go ahead with cuts to these entitlement programs. Those cuts would put cost strains on states not directly impacted by the disaster, ultimately leaving taxpayers to foot the bill. So, while this Finance Committee health care package will help alleviate some of the burdens for now, keep in mind that many in Congress still want to move forward with severe cuts to Medicaid, perhaps in the very near future.

Posted by Becky Lewis, 11:44:27 AM

Frist Sets Oct. 26 Deadline for Budget Cuts

Senator Frist (R-TN) and Senate Budget Chariman Judd Gregg (R-NH) announced today the deadline for the budget committee to report a bill cutting entitlement programs by $35 billion would be pushed back to October 26. The original deadline for the spending cuts to be reported was this coming Friday, September 16.

While Frist and Gregg did not mention the other two parts of the reconciliation package this year (yet another tax cut bill costing approximately the same as the amount of money approved so far by Congress for hurricane relief, and legislation to raise the country's debt limit by $781 billion), many suspect the deadlines for those bills will move back by a similar period to late October, early November.

Yet it isn't entirely certain the tax cut bill will move forward this year. The delay in the spending reconciliation bill and the fact Frist did not directly address the tax cut legislation may signal tax cuts primarily benefiting upper-income Americans in the aftermath of Hurricane Katrina are politically untenable. This would threaten the extension of a number of provisions of President Bush's tax cut package. Below is a chart of a few of the most likely to be included in the bill this year should Congress proceed.

Posted by Adam Hughes, 10:30:22 AM

Monday, September 12, 2005

Enactment of Bush Policies Would Explode Deficit

The Congressional Budget Office (CBO) released an alternative long-term budget outlook at the request of the ranking member of the House Budget Committee John Spratt (D-SC). The alternative projections were calculated using what Rep. Spratt said were more realistic assumptions for future spending than those CBO was required to use in their August 15 update.

In this report, CBO assumed the tax policies proposed by President Bush for 2006 are enacted, that the alternative minimum tax is indexed for inflation after 2005, that Bush's Social Security program is enacted, that discretionary spending through 2015 grows at the rate proposed by Bush for 2006 through 2010, and that spending on the wars in Iraq and Afghanistan is gradually phased down. The result of assuming the enactment of many of President Bush's policies is the explosion of the deficit, which almost doubles in the CBO analysis to $4.462 trillion over the next ten years.

Read the CBO report: Alternative CBO Baseline Projections Requested by Rep. Spratt

Posted by Adam Hughes, 05:09:18 PM

Friday, September 09, 2005

Monthly Budget Review Predicts Higher Deficits

The Congressional Budget Office released their Monthly Budget Review this week, in which they noted that for the first eleven months of this fiscal year (which ends Sept. 30), the government ran a deficit of $352 billion. For various reasons, including that fact that corporate receipts were up due to specifics in certain expiring tax laws, this deficit is $85 billion less than the deficit run at this time last year. These facts have allowed President Bush to claim that he is on track to cutting the deficit in half by 2009 (one of his many campaign promises).

The reality is, the Hurricane Katrina disaster will affect deficit levels for 2006. The CBO report states that deficits will not be greatly affected for FY 2005 because we only have one month to go; however they do mention "substantially greater costs will be incurred in fiscal year 2006."

It looks like we can expect deficits to be on the rise again in the year to come. The administration is not to blame for the fact that the disaster will have a negative effect on the FY 2006 deficit. However, the administration is to blame for our deficits being so high in the first place. In 2004 the budget deficit was $412 billion, and most of that was due to Bush's massive tax cuts. Now we are being forced to engage in deficit-financed spending because of the recent disaster, and the administration can claim that they had no control over what is sure to be a very high deficit figure next year. If not for their prior policies, however, our deficits would have never been so high in the first place.

Posted by Becky Lewis, 05:36:30 PM

Cuts Delayed For Month; Might Be Gone For Good

House and Senate GOP leaders have decided to postpone budget deadlines for cutting entitlement programs and passing additional tax cuts for at least a month. Republicans also announced an intention to postpone another difficult issue of raising the statutory debt limit by $781 billion until after the Columbus Day recess in mid-October.

But the bills may be more than simply delayed. In an unexpected twist, the reconciliation bills that will outline the budget and tax cuts may loose their fast-track protections. The Senate parliamentarian believes the delay in the deadline for the bills could allow Democrats to offer amendments, seek consessions from Republicans, or even filibuster the bills.

Posted by Adam Hughes, 05:29:42 PM

Thursday, September 08, 2005

Reconciliation To Be Delayed

Democrats have been pushing for leaders of the House and Senate budget committees to suspend or substantively change prior plans for the budget reconciliation process. While it is not clear whether this will happen, it is certain that the budget reconciliation deadline will at least be delayed, although for an indeterminate amount of time. Under the budget resolution passed in April, the reconciliation process would have resulted in:

Taking $35 billion from expected mandatory spending over five years;

Enacting $70 billion in tax cuts over five years; and

Raising the federal government's debt ceiling by $781 billion.

The deadlines which had been set for the actions mentioned above were September 16, September 23, and September 30, respectively.

Now it appears those deadlines will be extended for at least a few weeks, although the House and Senate Budget Committee Chairman Jim Nussle (R-IA) and Judd Gregg (R-NH) seem eager to not postpone reconciliation indefinitely.

Nussle stated, "We should not be distracted by this or anything else to continue our efforts to reform government. That's what reconciliation is about, it's about reforming government." Gregg chimed in with similar sentiments, calling the idea of indefinite suspension of reconciliation "blatant politics," and noting, "The view is we're still going to execute this reconciliation package in a timely manner." Democrats in the Senate and House are continuing to argue that the ultimate goals of reconciliation process would conflict with the needs of the victims of Hurricane Katrina, and should thus be suspended or drastically reconsidered.

Posted by Becky Lewis, 12:42:53 PM

Tax Panel Work Postponed For Now

The President's Advisory Panel on Tax Reform has delayed work because of the recent disaster. They were initially scheduled to hold two meetings in Washington, D.C. on September 8 and 15. It was unclear exactly what was to be discussed at those meetings.

The Panel has been working since January to make recommendations to the Treasury Department regarding the tax code. Their deadline for making recommendations was July 31, however it got pushed back to September 30 a few months ago, and now appears to be pushed back for an indeterminate amount of time. They are, however, planning to meet via teleconference September 23, during which they will most likely discuss when (and if) they will move forward to submit a report to the Treasury any time soon.

Posted by Becky Lewis, 11:59:45 AM

Committees Get to Work; Soc. Security Tabled For Now

Congressional tax committees have set to work and are looking into how tax policy can be used to help victims of the recent disaster, both immediately and in the long run. Chairman of the Senate Finance Committee Charles Grassley (R-IA) told reporters in a morning news conference that his committee would be looking into relief efforts associated with past natural disasters in order to determine which policies have been effective. Then, they will look into applying similar policies to help those affected by Katrina.

Meanwhile, in the House the Chairman of the Ways and Means Committee, Bill Thomas (R-CA), is apparently exploring a three-phase approach addressing the initial humanitarian concerns, followed by infrastructure concerns, and finally long-term reconstruction. The first measure, which could move as early as September 8, deals with getting money to individuals through TANF (Temporary Assistance for Needy Families). The measure would remove a lot of red tape and provide immediate assistance for a number of families.

Also, it is pretty clear that any sort of work on Social Security legislation is off the table now that Congressional leaders have their hands full dealing with the disaster. Sen. Olympia Snowe (R-ME) told BNA News Services that "Major issues are overtaking a number of issues like Social Security. It's hard to foresee a legislative agenda addressing the long-term issues associated with Social Security this fall." Grassley made similar comments, telling reporters that his top priority this fall will be disaster-related measures, the Roberts nomination, budget reconciliation legislation and appropriation bills, and then Social Security.

Posted by Becky Lewis, 11:16:12 AM

Wednesday, September 07, 2005

Bipartisan Group Calls For A Delay in Cuts

Four U.S. Senators sent a letter to Finance Committee Chair Charles Grassley (R-IA) yesterday, requesting that he "indefinitely delay consideration" of addressing entitlement cuts in reconciliation this year. The letter mentioned how important it is not to cut "numerous programs available to help meet basic needs," such as food stamps, Medicaid, housing and education.

Notably, two Republican Senators, Gordon Smith (R-OR) and Olympia Snowe (R-ME) sent this letter, along with Sens. Jeff Bingaman (D-AZ) and Blanche Lincoln (D-AR). While it is important that these Senators are standing up to protect these important programs in a time of extreme need, it is sad that it took a national tragedy of such large scale in order for many to recognize the importance of strong and well-funded social safety net programs.

Posted by Becky Lewis, 05:18:02 PM

$51.8 Billion Package Requested By President

The Associated Press is reporting President Bush will request $51.8 billion in additional emergency relief funding for Hurricane Katrina from Congress. As the cost of the Federal Emergency Management Agency's daily operations in the Gulf Coast climbed to over $700 million, it became clear the previous emergency supplemental approved last week for $10.5 billion would not last long. The request could be approved by Congress as early as tomorrow.

The second supplemental request will include $1.4 billion for the military and $400 million for the Army Corps of Engineers, which is working to repair breaks in the levee system around New Orleans. The remaining $50 billion will go to FEMA.

This is unlikely to be the last emergency funding for this disaster, as Congressional leaders and recovery experts are expecting the total damages to cost upwards of $150 billion. In addition, yesterday, the Congressional Budget Office (CBO) released a report examining the economic repercussions of Hurricane Katrina to Congressional leaders. The CBO found the economic effects of the disaster could be as severe as a one-percentage point drop in econonmic growth and the possible loss of up to 400,000 jobs by the end of 2005.

Posted by Adam Hughes, 02:35:19 PM

Democrats Urge Suspension of Budget/Tax Cuts

The Democratic leaders of the House and Senate, along with the ranking Democrats on the House and Senate Budget Committees are urging the GOP leadership in congress to suspend consideration of the budget and tax cuts outlined in this years budget resolution as the country continues to assess the impact of, and future needs for the recovery from, Hurricane Katrina. House Minority Leader Nancy Pelosi (D-CA), Senate Minority Leader Harry Reid (D-NV) and Sens. Kent Conrad (D-ND) and John Spratt (D-MO) sent a letter to their Republican counterparts today expressing the need for a re-evaluation of national priorities in the wake of this tragedy.

The letter states, "The budget resolution - including its reconciliation instructions - is a fundamental statement of our policy priorities. Hurricane Katrina will require a rethinking of these priorities."

With concerns already mounting about the increase in deficits caused by emergency funding for the victims of the hurricane, it will become more difficult for Republican leaders to justify cutting many programs survivors are likely to depend on while at the same time extending tax cuts that primarily benefit the wealthiest Americans and undermine the government's ability to provide more relief and recovery resources to the Gulf Coast region in the months and years ahead.

Posted by Adam Hughes, 02:10:53 PM

Watcher: September 7, 2005

Federal Budget

Posted by Becky Lewis, 10:57:53 AM

Tuesday, September 06, 2005

Devastation Forces Reconciliation Reconsideration

CongressDaily reported today that the recent Hurricane Katrina devastation is "making GOP leaders think twice about moving ahead with a $34.7 billion package of entitlement spending cuts outlined by the FY06 budget resolution." Congressional Republicans are coming under a good deal of fire from Democrats, who are arguing that now is not the time to be cutting social programs, with so many people in need.

Majority Leader Bill Frist (R-TN) said ""We will keep reconciliation on track for now," and added that scheduling decisions would be subject to a "day-to-day evaluation." There is a possibility that a reconciliation package could be amended and scaled back either in committee or on the floor.

Posted by Becky Lewis, 05:49:08 PM

Shifting the Focus Away From Tax Cuts

The New York Times ran an editorial on Saturday, "Katrina's Assault on Washington," which highlighted the fact that our political leaders are often more interested in promoting an agenda full of tax cuts than in promoting responsible investment and shared national sacrifice. This approach, the editorial argues, must change. The editorial says, "If [political leaders] respond by passing a few emergency measures and then falling back on their plan to enact more tax cuts, America will have to confront the fact that it is stuck with leaders who neither know, nor care, how to lead."

The recent disaster should be a wake-up call that it pays to invest money in our communities. This administration's focus on tax cuts over investment has left agencies and programs underfunded, and has, in a way, made it more difficult for us to respond to the what has happened on the Gulf Coast. The Center on Budget and Policy Priorities expands upon this in their recent statement on the challanges Congress faces now in the wake of the hurricane.

Posted by Becky Lewis, 03:27:55 PM

Estate Tax Vote Delayed For Now

Despite reports on Friday that the Senate would go ahead with the estate tax vote this week -- even in the wake of Hurricane Katrina -- it appears Frist has decided to postpone the vote for now.

The vote was delayed partially because of the efforts of Minority Leader Harry Reid (D-NV), who pressured Frist to call off the vote on tax cuts. In his statement, Reid said a vote on the estate tax would be "a travesty on top of a tragedy."

Bloomberg News: Estate Tax Vote Put Behind Katrina

Posted by Becky Lewis, 10:22:04 AM

Friday, September 02, 2005

Frist Will Go Ahead With the Estate Tax Vote

Congress Daily reported this afternoon that despite the devastation with this week's hurricane and flooding, Majority Leader Bill Frist (R-TN) plans to go ahead with the Congressional schedule as previously planned, which means that there will be a vote on the estate tax on Tuesday.

According to Congress Daily, Frist rejected a request from Minority Leader Harry Reid (D-NV) to suspend work on the tax bill. The Senate will, therefore, move forward with their vote to repeal the estate tax. Repeal of the estate tax would gut levels of federal revenue and would hurt charities by taking away an incentive for people to give. It seems as though in a time of national devastation -- as we are experiencing right now -- it is awfully bold of Frist and Congressional leaders to move ahead with legislation that would take more money away from federal coffers (which is used to invest in national infrastructure), and instead make a move to further pad the pockets of the wealthy. Disgraceful.

Sen. Baucus (D-MT), who has been the Democrats' key negotiator on the estate tax, issued the following statement regarding the vote:

“I am supportive of working on repealing the estate tax, but now is not the appropriate time. The nation is calling out for the Senate to act to help those in need. We have passed an emergency spending bill, but the emergency has not subsided. People are still homeless. New Orleans is still buried in dark water. Our work is not finished. Instead of moving to the estate tax when the Senate is back in session, I encourage my colleagues to concentrate on the victims left in Hurricane Katrina’s wake.”

Posted by Becky Lewis, 05:15:17 PM

Congress Passes $10.5 Billion Relief Package

Although Congress will be taking steps toward what House Majority Leader Tom DeLay (R-TX) called a "comprehensive, long-term response to the Katrina disaster," they began the process today by passing a $10.5 billion relief package to go towards immediate aid for hurricane victims. The bill passed the Senate yesterday and passed the House by voice vote today.

The funds will finance food and emergency shelter, medical care, debris removal, and cash payments to hurricane victims.

New York Times: Congress Approves $105B in Katrina Aid

OMB's Supplemental Request

Posted by Becky Lewis, 03:32:05 PM

Thursday, September 01, 2005

Congressional Action on Pensions More Likely Than SS

Congress is more likely to act on pension reform than social security reform this year, according to today's BNA:

"Congress ultimately may fail to find accord on Social Security reforms and instead pass more targeted pension reform legislation when it returns from its summer recess, sources who follow the issue told BNA Aug. 31."

Michael Tanner, director of the Cato Institute's Project on Social Security Choice, told BNA Aug. 31 that Congress is likely to pass a pension bill, even if it fails to muster support for Social Security changes. "You could get a decent pension bill regardless of what happens with Social Security," Tanner said.

Jason Furman, a senior fellow with the Center on Budget and Policy Priorities, rarely agrees with Tanner, a proponent of Social Security payroll tax-financed individual investment accounts. But Furman also said he expected Congress to act on pensions. "Something on the defined benefit [pension plan] side has to happen," Furman told BNA Aug. 31.

Furman said he anticipated that Congress would feel compelled to pass provisions aimed at strengthening the funding of defined benefit pension plans and measures aimed at bolstering the federal pension insurer, the Pension Benefit Guaranty Corporation.

"On Social Security, it is extremely unlikely that anything will be enacted by Congress. What the Republicans are trying to do is retreat from this issue," Furman said.

Posted by Becky Lewis, 05:42:15 PM

Congress To Return Early To Pass Hurricane Relief

According to various news reports, Congress will cut its summer recess short and return to Washington, DC either tonight or tomorrow to pass emergency relief legislation for the areas affected by Hurricane Katrina. The aid package will be approximately $10 billion and cover the entire area of the Gulf Coast, including parts of Florida, Mississippi, Louisiana, and Texas. It is possible the legislation would be negotiated by a small group of congressional leaders and passed by unanimous consent - a procedure often used for bills with no opposition.

The $10 billion amount will not begin to scratch the surface of what will be necessary. The Federal Emergency Management Agency - the federal agency charged with coordinating relief efforts after disasters such as this - is currently spending approximately $500 million per day in its relief efforts, which are not yet at full force.

Congress Weighs Emergency Session on Hurricane Aid

Congress Prepares $10 Billion Aid Package

Posted by Adam Hughes, 05:14:32 PM

Latest Entries by Theme

All Themes

Appropriations & Spending

Federal Tax Policy

Income/Wealth Inequality

Budget Projections

Government Performance

Estate Tax

State Fiscal Policy

Watcher