There's a myth out there that President Bush is a "big spender." If anything, he's a tax cutter and a stable spender on the macrolevel. Take a look at this chart, via Econospeak.

Or maybe he's just a budget shifter. Here's a chart on defense and domestic discretionary spending by EPI:

That domestic spending includes homeland security, which has seen huge increases. The share of GDP going to non-defense domestic discretionary programs has fallen from 3.4 percent in 2001 to 3.1 percent in 2007.

Whatever Bush is, he's not the big spender on social programs people say he is. Don't believe the hype.

A cool new site called governmentisgood.com. Next time that uncle you and everyone else has goes off about "big government," tell him to visit it.

Minority Whip Rep. Roy Blunt (R-MO) is picking up his ball and going home.

CongressDaily Extra(sorry, no link):

Angry House Republicans slowed business on the floor to a crawl this morning, offering a motion to adjourn to protest the decision by Democratic leaders to vote today on a new State Children's Health Insurance Program bill. Aides to Minority Whip Blunt told GOP lawmakers to expect similar procedural tactics throughout the day.

Image by Flickr user mr. tedward used under a Creative Commons license.

CBO has an new cost estimate of all the wars we're in.

The war spending will accrue an estimated $700 billion in interest on the debt, bringing the top total estimate to $2.4 trillion.

Could CBO do a "pay-for" analysis, too? Like Jason Furman did on the tax cuts? Even the Bush administration hasn't claimed that wars pay for themselves.

That was quick- the House will vote on a tweaked SCHIP bill today. The Washington Post:

Just one week after failing to override President Bush's veto, House Democrats will put a new version of their $35 billion expansion of the State Children's Health Insurance Program to a vote today, hoping that minor changes will win enough Republicans to beat Bush this round.

The new version will underscore that illegal immigrants will not have access to the expanded program. It will ease adults off the program in one year, rather than the two in the vetoed version. And it establishes a firmer eligibility cap at 300 percent of the federal poverty line, just more than $60,000 for a family of four.

The move took Republican leaders by surprise. Bush administration officials yesterday voiced conciliation, suggesting the president could accept legislation that would expand the program by about $20 billion over five years, far bigger than the $5 billion expansion that Bush initially proposed. At the same time, Health and Human Services Secretary Mike Leavitt has been meeting with House and Senate Republicans, urging them to hold the line against an even larger bill. And Bush continues to oppose the tobacco tax increase that Democrats want to fund the measure.

As noted by Matt yesterday, the Senate approved the Labor-HHS-Education appropriations bill 75-19.

What next for FY 2008 appropriations? Matt takes a look in this week's The Watcher.

A few facts on the congressional budget resolution (from Allen Shick's classic The Federal Budget: Politics, Policy and Process):

• For about the first 200 years of this country, there was no congressional Budget Resolution (BR) and no discretionary cap.
• The budget resolution was originally conceived of as a way to reduce deficits. When it didn't work that well, discretionary caps were added to make it stronger.
• The discretionary spending has decreased from nearly 1/2 the budget in 1975 (the year of the first budget resolution) to less than 1/3rd now.
• In 1975, domestic discretionary outlays were 4.4 percent of GDP. The Congressional budget plan for FY08 has it at 3.6 percent. That difference (by my back of the envelope calculation) is equal to about $100 billion in today's dollars.

For more on why the discretionary budget cap (or the congressional budget resolution?) may not be the best idea, see this post.

To listen to him, Sen. John Sununu (R-NH) sounds as committed to cutting spending and the deficit as he ever has: "I think we managed the growth much more effectively in 2004 and 2005 than we had in 2001 to 2003... The fact is, liberals here in Washington want to grow the size of government at a much faster rate, at a higher rate than the Republican minority."

Then riddle me this: why has Sununu almost alone among his GOP colleagues in the Senate, voted in favor of every single one of the Democrats' spending bills this year, including the ones, such as the Labor-HHS bill, that President Bush has threatened to veto on account of "excessive levels of spending"?

Could it have anything to do with the fact that he is trailing in the polls in his re-election race in a state that suddenly went deep blue last year for the first time in a century?

Jonathan Chait of the New Republic has a good article on the uptick in entitlement "sky is falling" rhetoric.

And there's a couple new fiscal policy blogs worth going to: the Tax Policy Center's TaxVox and FacingUp.org's new blog. One of the coolest thing about blogging is that it facilitates dialogue; hopefully we've got some interesting conversations to look forward to.

House Conservatives Sink SCHIP
Despite a considerable lobbying campaign by supporters, House Republicans blocked an effort to override President Bush's veto of a five-year, $35 billion funding increase for the State Children's Health Insurance Program (SCHIP) that would have provided an additional 4 million uninsured children with health insurance.

AMT: Prospects for Reform and the PAYGO Challenge
In the coming weeks, Congress will come to grips with what is arguably the most important tax issue of the year, the Alternative Minimum Tax (AMT). In the very near future, House Ways and Means Committee Chair Charles Rangel (D-NY) will propose a "patch" to avoid a steep increase in the number of taxpayers liable under the AMT, as well as what he calls "the mother of all tax bills" — his long-awaited measure to repeal the AMT. In the Senate, the picture is more muddled amid rancorous debates in the Finance Committee, where AMT legislation presents the biggest challenge yet to the pay-as-you-go (PAYGO) principles adopted by Congress early this year.

Labor-HHS Appropriations to Test Bush Veto Threats
Congress is nearly ready to send President Bush the first appropriations bill of the FY 2008 budget cycle — almost one full month overdue. The Senate is scheduled to vote today, Oct. 23, on the $150 billion Labor-HHS-Education appropriations bill. Once that version is conferenced with the House version (which passed in July 276-140), it will be sent to the president, where it may face a veto.

Posted by Matt Lewis, 02:14:33 PM



Carried Interest, PAYGO and AMT

Rather than get into the AMT/PAYGO weeds, I thought I'd point out what's probably obvious: the most likely candidate for an offset to the AMT patch is legislation to close the carried interest loophole. Shutting down a host of other corporate tax loopholes could also do the trick (see this article in The Watcher for more). Arguing that we shouldn't pay for the AMT patch is pretty close to arguing that we shouldn't address these injustices in the tax code anytime soon.

ITEM from the Republican Study Committee:

Rep. Jeb Hensarling of Texas and other members of the Republican Study Committee are asking colleagues to reject a patch for the alternative minimum tax that would result in what they call other tax increases to pay for it. In a Dear Colleague dated today, Hensarling and three other lawmakers wrote, "The correction of tax mistakes should never be offset with tax increases." The lawmakers wrote that they support efforts to prevent middle-class taxpayers from being subject to the AMT, but not by "offsetting tax increases on other people and businesses."

Rep. Jim McCreary (R-LA), ranking member of the House Ways and Means Committee outdoes Hensarling, commenting that "This is not a new tax cut that should be paid for. This is preventing a tax increase." McCreary seems not to take account of the facts 1) that the continuation of current law is never a tax increase proposal that must be offset under PAYGO and 2) that "patching" AMT is therefore a tax cut that must be paid for under PAYGO.

When McCreary realizes this, he should quickly inform his counterpart in the Senate, Sen. Charles Grassley (R-IA), the top Republican on the Senate Finance Committee. Grassley will be harder to convince, since he has an even more convoluted notion of why a patch shouldn't be paid for: because the government never intended to collect the large amounts of revenues the AMT would raise if it were left unchanged. Never intended to collect it?

That's a lot of rubbish. Now if you had such a load of fresh rubbish dropped on your street, would you believe someone who told you that the Department of Sanitation won't touch it because it never intended to collect it?

For months, the Bush administration has been issue one veto threat after another, as the House and Senate approve appropriations bills that narrowly exceed the President's budget requests. Yesterday, the Senate approved, by a veto-proof 75-19 majority) the Labor-HHS bill, the largest domestic spending bill in the budget. The bill provides $152 billion in discretionary funds for medical research, early childhood education, community health centers, and nutrition services for seniors.

The bill increases spending in these areas by five percent over last year. Bush requested an increase of 2.5 percent. If you support fiscal responsibility, how could you possibly support such a massive, budget-busting increase?

In 2006, the President sought and got $120 billion in appropriations for Iraq to support military operations and indigenous security forces. This year, the corresponding figure was $170 billion (see today's CBO report, Table 2). That's an increase of 42 percent.

If you support fiscal responsibility, how could you possibly support such a massive, budget-busting increase?

The Senate passed the Labor-HHS appropriations bill last night by a veto-proof majority, and then some (75-19). Now the bill heads to a conference and then to the President, who has promised to veto it. But given the margin of victory in the Senate, does he still think a veto is the wisest way to go?

The federal government wastes a tremendous amount of money. I'm talking hundreds of billions of dollars every year.

But no, it's not on mob-infested unions, lazy bureaucrats or degenerate poor people. Most of it is spent on everyday people.

For more, check out this testimony by CBO director Peter Orszag on performance budgeting for Medicare, Medicaid, and tax expenditures- the biggest money wasters of them all.

In the classic Monty Python film, "The Search for the Holy Grail," an already diminutive swordsman stuns his foe by insisting on fighting on, despite having already lost both arms and legs.

It would appear that President Bush, too, has no legs to stand on, having lost the nation's support for his war in Iraq, lost Congress last November, and floundering at sub-Nixonian approval rating levels in the latest Zogby poll.

So yesterday, when Bush, as the Post reported, "requested -- one might even say demanded -- that Congress give him yet another $46 billion for his military campaigns, for a total of $196 billion this fiscal year," the paper stood aghast, disbelieving, asking and answering "What explains Bush's cocksureness?"

Considering Bush's abysmal approval ratings, the widespread opposition to his war in Iraq and the Democratic control of Congress, that was a pretty brazen act. But Bush yesterday made it clear that [t]here will be no search for common ground, no outreach to critics, not even further explanation of his policies.

According to the latest Washington Post/ABC News poll, nearly 70 percent of Americans -- an overwhelming majority, by any standard -- think Congress shouldn't give Bush all the money he's requesting for the war. And 43 percent think the request should be reduced sharply.

The president evidently is still counting on his ability to use the fear of appearing weak or unpatriotic to stampede skittish Congressional Democratic [sic] into giving him what he wants.

Who would bet that Bush will have his head handed to him, in the end?

Illustration by Joe Sutliff, After Monty Python and the Holy Grail

Via BNA (sorry, no link), we learn that Treasury Secretary Henry Paulson, through a letter to House Ways and Means Committee member Rep. Tom Reynolds (R-NY), is imploring Congress to clean up the Bush Administration's mess:

If Congress fails to [to implement a one-year AMT "patch"], we estimate that 25 million taxpayers will be subject to AMT in 2007 - 21 million more than were subject to the tax in 2006. We estimate that these 25 million taxpayers will pay on average an additional $2,000 in Federal income tax. For these taxpayers, failure to enact a patch for 2007 would result in a substantial unexpected tax increase.

Ummm, Hank, aren't you forgetting something?

Image by Flickr user jwinfred. Used under a Creative Commons License.

Via, Lawrence Lessig, Robert Reich's new book, Supercapitalism, makes a point regarding the place of corporations in civil society well worth highlighting:

This is a critically important point for people to get -- and one that many good thinking souls don't yet agree with. [...] Corporations are not more efficient governments. They are instead increasingly efficient money making machines. And while there's nothing at all wrong with money making machines -- indeed, wealth and growth depends upon them -- there is something fundamentally wrong with trusting these machines to restrain the drive for profits in the name of doing the right thing.

The Allard amendment that would automatically cut programs in the Labor-HHS appropriations bill should OMB hand down an "ineffective" PART rating was hammered back by the Senate this evening by a vote of 68-21.

Thanks to everyone who contacted Senators to urge them to vote against this dangerous policy.

Michael Tomasky asks a vital question in The Guardian:

That is, Americans have now experienced a conservative government failing them. But what lesson will they take? That conservatism itself is exhausted and without answers to the problems that confront American and the world today? Or will they conclude that the problem hasn't been conservatism per se, just Bush, and that a conservatism that is competent and comparatively honest will suit them just fine?

There's a lot of ink on this subject (Greg Anrig Jr. has written a book on it, Rick Perlstein has a blog), but there are two major fiscal policy stances that are both distinctly conservative and have directly contributed to recent governmental failures (think Katrina, Walter Reed, Iraq, etc.): budget cuts and excessive privatization.

I could be wrong, but I don't think cronyism, corruption or arrogance are in conservative's blood, nor do they have a permanent monopoly on it, however much they do at the moment. But as champions of the "free market" and "self-reliance," conservatives are ideologically disposed to favor agency cuts and privatization.

Once effective governance was an issue to co-opt from the right; now it's a defining issue for liberals, particularly in these two ways. Only liberals can clean up the mess conservatives made of government, because only liberals understand the limitations of the market and the potential of government. Hopefully the public will see this.

The National Priorities Project has a new analysis that compares the amount of taxes each state paid and what each saw in return in military spending in 2005. The study finds that 32 states pay more in taxes than they receive in military expenditures.

NPP have also included in their nifty trade-offs tool the FY 2008 war supplemental request. Here's an example using DC:

Taxpayers in District Of Columbia will pay $664.2 million for proposed Iraq War Spending for FY2008. For the same amount of money, the following could have been provided:

• 171,000 People with Health Care OR
• 1,175,336 Homes with Renewable Electricity OR
• 11,469 Public Safety Officers OR
• 11,306 Music and Arts Teachers OR
• 320,881 Scholarships for University Students OR
• 59 New Elementary Schools OR
• 2,307 Affordable Housing Units OR
• 210,616 Children with Health Care OR
• 90,267 Head Start Places for Children OR
• 11,306 Elementary School Teachers OR
• 9,983 Port Container Inspectors

Yet another in a series of repeated instances of misreporting about the carried interest issue appears in an article by Nicholas Rummell in today's Financial Week:

Among the erroneous or misleading assertions in the article:

• "Last week, House Ways and Means Committee chairman Charles Rangel (D-N.Y.) drove another nail into the coffin of the carried interest bill, saying the overall [AMT] reform he had been planning—an effort to which the carried interest bill was to be attached—would be postponed until 2008."

  FACT: Rangel has said he will introduce not just the overall reform bill but another, smaller one to patch the AMT in the coming days — about which he has said: "We'll pay for it with great difficulty... It's going to be politically painful," implying that the carried interest bill, the only offset on the table which could pay for most if not all of the patch, was on the table. See here.

  FACT: Incredibly, this very reporter wrote ten days earlier that "Mr. Rangel has said that linking AMT to carried interest may create a "veto proof" bill." See here.

• "Senate Majority Leader Harry Reid (D-Nev.) has also said recently that he would not schedule the carried interest legislation for a floor vote until next session at the earliest."

  FACT: "The reality is that whether the Senate addresses the carried interest issue is largely up to the Senate Finance Committee, not Senator Reid." See here

• "While the carried interest bill is not exactly dead, it certainly seems to be in a coma."

  FACT: In a coma, or in committee? The article contradicts itself here, stating elsewhere: "a spokeswoman for Rep. Sander Levin (D-Mich.), who sponsored the carried interest bill, said the PE tax legislation is 'still very much in the mix' and that it would likely be attached to the one-year AMT patch legislation, a smaller bill. 'That bill still needs to be paid for,' she said, adding that that means carried interest may still be in play."

Today, the president formally requested funds that Defense Secretary Robert Gates was sent to the Hill in September to retrieve.

This request brings total FY 2008 supplemental war funding to $196.4 billion. It is the latest in a series.

According to CQ($), House Appropriations Chair David Obey (D-WI) has no plans to move war spending legislation until the president makes changes to his war plan, but that doesn't really matter because the Pentagon's well is far from dry.

Congress is not expected to pass a new war funding measure this calender year, although it will have to provide some additional money. Earlier this month, House Appropriations Committee Chairman David R. Obey, D-Wis., said he will not move a war funding bill out of his committee in 2007, saying the president must change his policy in Iraq before Obey will advance the bill.

Congress could allow the Pentagon to borrow war funds from its regular fiscal 2008 spending bill, once that measure is enacted, or it could attack a few months' war funding to some other appropriations measure in the weeks between now and adjournment.

According this Statement of Administration Policy the Bush wants to veto Labor-H because its funding level is about $9 billion more than the president's FY 2008 budget request. But a reading of the SAP betrays his cafeteria-style "fiscal responsibility".

Look at all the programs for which he wants to increase funding:

• The Administration is very concerned about the $229 million reduction in the Reading First program.
• the Senate is urged to provide $25 million requested for the Adjunct Teacher Corps
• [The Administration] is disappointed that the bill provides $64 million less than the President's request [for the Striving Readers program].
• The Administration urges the Senate to fully fund the $300 million requested in the President's Budget [the Promise and Opportunity Scholarships program].
• The bill does not provide requested funding for the Secretary's Adolescent Health Promotion initiative.
• The Administration is concerned that the bill reduces [the Compassion Capital Fund] by 17 percent from FY 2007.
• The Administration strongly opposes the 26 percent funding cut proposed by the Committee [for the Abstinence Education program].
• The bill provides $25 million less than the $150 million requested for Community Based Job Training Grants and funds this program within the Dislocated Worker National Reserve.
• The bill provides only one-third of the requested funding for [the Reintegration of Ex-offenders program].
• The Administration opposes the 20 percent reduction for the Office of Labor-Management Standards [for the Union Financial Integrity program].

One can quibble over the merits of the funding requests (I certainly would), but it's clear the president is only concerned about over-spending when it isn't on his pet programs. Bush can hardly be accused of slavish devotion to "fiscal restraint".

The Senate is debating the Labor-HHS-Education appropriations bill today (and probably tomorrow), and Sen. Wayne Allard has introduced a disturbing amendment that would automatically cut the budget of any program that was given an "ineffective" PART rating by the Office of Management and Budget. Under Allard's amendment, any program that is listed as "ineffective" under the PART would be automatically cut by 10 percent, with the amount cut used to pay down the national debt. To see which programs would be cut, see this list of "ineffective" programs on the ExpectMore.gov website: programs rated ineffective. The list includes Even Start, the Perkins loan program, vocational education grants, Upward Bound, the Workforce Investment Act programs for Migrant and Seasonal Farmworkers and Youth, the Substance Abuse Prevention and Treatment Block Grant, and the Healthy Community Access program, among others.

But there is a larger issue at play here than where you come down on these programs or the PART itself (and you should come down against it). Congress is granted the authority to appropriate public funds under the Constitution, not the executive branch. Enacting this amendment would transfer that authority to the executive branch, and more specifically to a number of unelected public employees whose sole job is to carry out the policy preferences of the president. Why would any Senator want to vote to give him or herself less power?

What's more, imagine the degree or manipulation of future PART scores for programs covered under this bill if this administration (or any future one) knew a rating of "ineffective" would bring an automatic 10 percent cut. Something tells me we would start to see a whole lot more "ineffective" ratings for programs in the Departments of Education, Labor, and Health and Human Services.

A vote on the amendment is likely later today or tomorrow morning. Please take 5 minutes to call your Senators offices to tell them to vote no on the Allard amendment to the Labor-HHS-Education bill.

A good article today on the declining value of funding for the Low Income Home Energy Assistance Progam (LIHEAP). Given that gas prices are so volatile, wouldn't it make more sense just to make LIHEAP an entitlement program?

About 30 million low-income American households who will need help paying heating bills this winter from a U.S. government program will be left in the cold because of a lack of funding for the program.

The poor, already digging deep to pay for expensive gasoline, also will face much higher heating fuel costs, especially if oil prices stay near record levels.

Consumer groups and state energy officials have sounded the alarm, saying a federal program to help poor families pay heating bills will have nowhere near the money needed to cover those expected to seek assistance.

White House Spokesperson, Dana Perino: "We won this round on SCHIP."

Congratulations on winning. What exactly did you win?

Well, here's President Bush, on vetoing SCHIP:

And that's why when I tell you I'm going to sprint to the finish, and finish this job strong, that's one way to ensure that I am relevant. That's one way to ensure that I'm in the process. And I intend to use the veto.

Wait- I thought the SCHIP debate was about a difference in "philosophy" and the role of government. But of course, it's really about Bush "winning" and retaining power. Pretty sad that 4 million kids have to be denied health care for such an awfully cynical reason.

Although the American public is giving Congress some of its lowest ratings ever received, Congress has done an admirable job in respect worth pointing out: adherence to the principles of PAYGO. Between the adoption of the conference agreement on May 16, and the start of fiscal year 2008, nine laws affecting budget authority, outlays, or revenues have been enacted, including:

• Food and Drug Administration Amendments
• Extending Andean Trade Preferences
• Extending Transitional Medical Assistance
• Implementing 9/11 Commission Recommendations
• College Cost Reduction and Access Act
• Extending Trade Adjustment Assistance
• TMA, Abstinence Education, and QI Programs Extension

In every instance, Congress has stuck to its guns on PAYGO.

But its commitment to PAYGO will be tested in the weeks ahead, as Congress gets ready to adopt a one-year AMT patch and a package of extenders. To comply with PAYGO, these measure will need to raise revenues by the same amount that they cost.

A dissenting view of PAYGO issues from -- of all people -- the administration's budget director, Jim Nussle:

We think PAYGO for taxes is a little bit perverse and doesn't recognize that it's really your money, it's not the government's money.

Nussle forgot to say this at his confirmation hearing this summer, for some reason.

After yesterday's post on the budget process, I got to thinking: what's the point of the Congressional Budget Resolution (see this Powerpoint for budget process basics)?

Budget process experts will tell you that it brings order and coordination to the annual budget. But it also puts pressure to keep discretionary spending low.

I'm talking about the cap on discretionary spending. Once it's set, it's rarely exceeded. In fact, its purpose is to make sure that spending does not go above a certain level. That is anti-spending.

And is it even necessary? I can imagine a budget resolution without a cap that still helped coordinate the efforts of the two Houses. It could set goals for each appropriations bill and give reconciliation instructions. It could even set a topline goal. But it wouldn't have to make it enforceable.

If there isn't a cap, groups won't be fighting each other as much for funding. It'd be easier to add funding once the bills were on the floor. And it'd be even easier to readjust the appropriations bills for surprises. Supplementals wouldn't be as common, I'd imagine.

In fact, if we really wanted to facilitate discretionary spending, we could make it a funding "floor" instead of a cap, i.e. funding couldn't be any lower than X. That could improve coordination at the same time.

The fact of the matter is that the annual budget process is broken. We've now got supplemental appropriations bills that have almost reached $200 billion. Increased discretionary spending is a high priority, it seems, but the budget process might be thwarting or distorting its expression.

Writing for McClatchy, Warren P. Strobel and Jonathan S. Landay report on a criminal probe into mismanagement of the construction of the $600 million Baghdad Embassy.

A congressional committee is examining whether the walls of the still-unfinished embassy complex, which are supposed to be blast-resistant, performed as they should have during the mortar attack.

U.S. Ambassador Ryan Crocker banished [the State Department contractor in charge of the project, James L.]Golden from Iraq, but he continues to oversee the construction of the embassy in Baghdad; to be the liaison with the contractor, Kuwait-based First Kuwaiti General Trading and Contracting Co.; and to supervise other projects for the State Department's Overseas Buildings Operations (OBO) bureau.

The embassy — actually a 104-acre, Vatican-size compound of 21 buildings meant to house and sleep about 1,000 U.S. officials was originally meant to open in June, then in September. Now, due to problems with the sprinkler system, the latest in a series of deficiencies blamed on First Kuwaiti, it remains unclear whether it will be ready for occupancy this year.

It's not that private firms can never do right, but that, contrary to conservative ideology, they are quite capable of colossal failure. The tragedy of the president's failure to recognize this simple, yet blindly obvious fact will result in millions of kids going without health insurance.

The Washington Post reports that a retooled SCHIP bill will be back on the floor in two weeks.

The House failed to overturn the President's veto of SCHIP, 273-156 (roll call).

This was closer than the last SCHIP vote in the House (265-159), so your efforts did make a difference.

This fight isn't over. Speaker Pelosi has publicly promised that Congress will keep sending SCHIP bills to the President until its enacted. Keep an eye on the BudgetBlog for the latest on what Congress will do next on SCHIP.

There are a few reasons to think that the idea of estate tax repeal has little of the sway in Congress of even a year ago, when then-Senate Majority Leader Bill Frist (R-TN) put the issue on the floor every chance he could.

First, the GOP is now divided in its approach to the deficit, with the President and some others desperate to restore their credentials as fiscally responsible.

Second, even when they had 55 seats in the Senate, the GOP last year could not muster more than 57 votes to invoke cloture and bring estate tax repeal to the floor. A House vote on a Republican motion last week to repeal the estate tax failed, with just 10 Democrats supporting repeal, down from 42 who backed it two years ago.

Third, there is a sea-change afoot demonstrated most clearly by the fact that a front-running candidate for president could actually say, in defense of the estate tax at a town hall meeting in New Hampshire of all places:

Part of the reason why America has always remained a meritocracy where you have to work for what you get, where you have to get out there, make your case to people, come up with a good idea, is that we never had a class of people sitting on generation after generation after generation of huge inherited wealth.

Or, as Rep. Richard Neal (D-MA), chair of the House Ways and Means Subcommittee on Select Revenue Measures, said in an article in Roll Call ($) today, the estate tax is:

My sense is it's not going anywhere now... It's very difficult to argue the wealthy have had a hard time the last six years... I think the steam has gone out of the Republican tax cut agenda.

Inclusion(ist?) has up an interesting paper about the need to reform the budget process. Its thesis is that the budget process has been structured in a way that has successfully prioritized deficit reduction, and that these rules have focused attention more on the price of spending than its value.

I won't engage the specifics of the proposal to reform the budget process. But I think it makes an important point about budget politics and process. Coincidentally, it echoes the imitable Stan Collender in his column this week:

There has been strong political pressure in the United States to reduce the deficit for at least the past two decades. Eliminating the deficit became a formal requirement in the mid-1980s when Gramm-Rudman-Hollings made reducing the deficit the government's explicitly stated policy. While no longer required, it has been a political imperative ever since GRH and its successors were allowed to expire.

If Stan Collender says it, it must be true: budget politics have centered around the deficit. But its arguable that the budget process is the cause of this focus. As Collender points up, deficits remained central well after a tule aimed at reducing the deficit lapsed.

Similarly, conservative demand for passing enormous tax cuts probably came before the changes to PAYGO rules. Once they were in power, they changed the rules to promote their preferences. The Democrats have restored PAYGO rules, most likely because they wanted to make sure that they would pass deficit-neutral legislation. If process determined policy, the Democrats would not have acted any differently than the Republicans, and wouldn't have made the budget process changes they did.

Anyway, I find it more convincing that budget process rules follow, rather than precede, a change in the political climate. That's not to say they don't have a strong influence on policy; without PAYGO rules, I find it hard to imagine that every mandatory spending and tax bill would have been offset.

But is deficit reduction still that what people want from government? It reminds me of something Sen. Chuck Schumer (D-NY) said in the New York Times last week:

It's just as clear that Democrats think that the political game has changed. Pay for most workers has been growing only a little faster than inflation over the last five years, and except for the late 1990s hasn't really done well since the early 1970s. Inequality has returned to the levels of the 1920s.

''It's an economy that demands more from our workers and gives less in return,'' Hillary Clinton said in Iowa this week, on her Middle Class Express bus tour. As Charles Schumer, New York's other senator, told me earlier this year: ''In the past, the attitude was, 'Get government out of the way.' And now it's, 'Gee, I may need it.' ''

If Schumer and Clinton, two centrists if there ever were any, are correct, we need to start talking about how to change the budget process to ensure that the public gets what it wants. Once deficit reduction is no longer the public's chief fiscal goal, it seems appropriate to make the budget process facilitate spending. This paper's a good place to begin that conversation.

David Broder has a good column today about the bipartisan housing trust fund, which passed the House with little notice by the press. Worth a read.

Let it be known that the BudgetBlog holds no grudges or biases. You write a good column, you will be praised. You write a bad one, well...

This morning's New York Times has a story about New York City food banks whose supplies are falling futher and further behind demand. The Oregon Food Bank has been having the same problem. The Emergency Food Assistance Program (TEFAP), according to both food banks, is partially to blame for the rundown in available food.

TEFAP supplies food banks all across the country with commodities that they turn into consumable products. It's a part of the "Farm Bill," a collection of nutrition, farm assistance, and conservation programs. The Farm Bill, as you may know, is up for reauthorization this year. The House has passed its version, but the Senate has not. The President opposes the bill but has not directly threatened to veto it.

A quick look at FedSpending.org shows that TEFAP expeditures have decreased by about 1/3rd over the last 3 years.

But fortunately, according to the Center on Budget and Policy Priorities, the House-passed Farm Bill nearly doubles the ceiling that TEFAP funding has to stay under. The Senate ought to hurry up and pass the same funding increase before things get even worse.

Two key developments today point to a possible emerging House-Senate compromise on alternative minimum tax (ATM) legislation.

House Ways and Means chair Charles Rangel (D-NY) Rangel told reporters this afternoon that he would advance a one-year "patch" of the ATM. He added that a more comprehensive and permanent bill to rewrite the AMT that he has been working on for months will probably not face a vote by the full House until next year. "Vetting it would bring us more support than fast-tracking it," Rangel said. In any event, the Senate has made clear that a broader tax bill is a nonstarter in that chamber.

In another important development today, Senate Finance Committee ranking member Charles Grassley (R-IA) said for the first time that he would welcome a compromise that indexed, or "patched" the AMT threshold to protect the vast majority of taxpayers, while raising taxes on the wealthy to defray the budgetary impact, refining his earlier position that "AMT is a phony revenue source. [T]he revenue the AMT would not collect as the result of repeal or reform should not be offset as a condition of the repeal or reform."

With must-pass a one-year AMT patch (cost estimate: $55 billion) and a two-year tax extenders bill ($30 billion) coming down the pike in the next month or two in Congress, fiscally responsible members are searching high and low for the roughly $85 billion in offsets needed under PAYGO for these two bills alone.

Closing the carried interest tax loophole can probably pay for one but not both of these measures. Some little-noted but timely and resourceful proposals -- all in the Senate Finance Committee hopper right now -- can help raise the rest of the revenue needed for PAYGO compliance. Three of the most promising of these are summarized below:

• S. 681: The Stop Tax Haven Abuse Act

  Tax cheats make it harder to maintain America's highways, protect our borders, advance medical research, and inspect our food. They make it difficult to give needed tax relief to small businesses and middle-income victims of the alternative minimum tax. S. 681 would strengthen federal regulators' ability to combat offshore tax haven and tax shelter abuses via a set of practical enforcement tools that would begin to reduce the $100 billion offshore tax gap that forces honest taxpayers to shoulder a greater tax burden than they would otherwise have to bear. Estimated savings to taxpayers: $5 billion a year.

• S. 1124: The Tax Lien Simplification Act
  Outdated federal tax lien laws and procedures force the IRS to waste taxpayer dollars on an old-fashioned, inefficient, and burdensome paper tax lien filing system that should be replaced by a modernized electronic filing system capable of operating at a fraction of the cost. S.1124 -- which has bipartican support -- would bring the federal tax lien system into the 21st century. Currently, the IRS service center staff is charged with filing tax liens nationwide and complying with the myriad filing rules in effect in the 4,100 recording offices across the country. Amending the law to streamline the tax lien filing system, moving it from a paper-based to an electronic-based system, would not only advance the more efficient, cost-effective tax system we all want, it would also save $570 million in taxpayer money over ten years.

• S. 2116: The Ending Corporate Tax Favors for Stock Options Act
  Right now, U.S. accounting rules require companies to report their stock option expenses one way on the corporate books, while Federal tax rules require them to report them a completely different way on their tax returns. In most cases, the resulting book expense is far smaller than the resulting tax deduction. So, under current U.S. accounting and tax rules, stock option tax deductions often far exceed the stock option expenses recorded by the companies. In 2004, corporations took $43 billion more in deductions on their tax returns for stock option compensation expenses than the stock option expenses actually shown on their financial statements for the same year. This disparity enabled corporations, as a whole, to reduce their taxes for the year by $10, perhaps as much as $15, billion.

Last night, the Senate approved (75-19) the veto-threatened Commerce-Justice-Science Appropriations bill.

Next up: Labor-H

The war in Iraq has given rise to numerous scandals and allegations of violation of U.S. law sufficient to undermine America's moral authority abroad and at home for a long time to come.

Two excellent recent write-ups shedding light on how the latest such scandal, "Blackwatergate," reflects on budget politics and beyond are below:

• Blackwatergate Is Also A Big Budget Problem, Stan Collender

  ... unless federal budget politics change drastically, there will continue to be a premium on projecting ongoing military spending as low as possible by underestimating the nature and extent of the threat and the troops needed to deal with it... It also means that the U.S. will rely on firms like Blackwater for quite some time unless revenues and spending reductions become a politically acceptable way to pay for the increase in personnel costs that would result from a more realistic assessment.

• The Other Blackwaters, Matt Lewis, OMB Watch

  ... privatization—through corporate subsidies, contracting and even some tax breaks—makes it much more difficult for the government to win the "hearts and minds" of the public. As a result, public confidence in government is at rock bottom.