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Home :  Federal Budget & Tax : 
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Friday, December 21, 2007

2007 Budget Endgame: A Re-Capitulation
The Devils in the Details

Now that Congress has completed its work on the budget for 2007, we can take a critical backward glance at the process and where it ended up. Althought there are silver linings, as noted in 2007 Budget Endgame: Recapitulating the "Capitulations", in the main, it's not a pretty picture.

I'm not talking about the 1,400 pages in the budget bill or the roughly 10,000 earmarks in them that it is subject of endless (often misdirected) attention. Truth told, this year's earmarks -- all those devils in the details -- are 25 percent less costly than last time around. Nor about the incidental though regretable violation of the PAYGO principles, a violation that congressional leaders would do well to repair early in 2008 before they are rightly accused of abandoning fiscal responsibility for good.

For President Bush can take care of all of that all on his own very well, thank you very much -- as today's Washington Post informs us.

I'm talking about feigning and fecklessness on budget policy and process demonstrated this year by our elected leaders in Washington. If we look back at the final budget picture for 2007, this may be what we are left with:

When the 2007 budget battle is recalled, no doubt people will remember the Democrats' fruitless negotiations with themselves, the President's veto madness and late-term discovery of fiscal frugality, and the two parties hurtling year-end on a breakneck course toward government shutdown. They will recollect the Big Blink, as leaders Reid and Pelosi seemed to cave in a series of capitulations, accepting final budget numbers that looked as if they had taken dictation from Bush. But maybe they will also read the fine print and see all those Democratic devils in the details.


Posted by Dana Chasin, 03:13:54 PM



Thursday, December 20, 2007

Congress Abandons Fiscal Responsibility

OMB Watch released a statement yesterday afternoon harshly criticizing the Democratically control Congress and the president for abandoning fiscal responsibility in the final hours of 2007 after they entire year was spent adhering to or attempting to adhere to righting our nation's fiscal course. From the statement:

Adding insult to a year of fiscal policy injuries, Congress has abandoned fiscal responsibility by waiving pay-as-you-go (PAYGO) rules in order to pass a one-year patch to the alternative minimum tax (AMT) without offsets. This tax cut adds another $50 billion to an already expanding deficit next year, and will give fewer options for our children and grandchildren to seek solutions to the problems of tomorrow.

While I expect as much from President Bush, this is a huge disappointment from the new Democratic majority in Congress whose number one promise was to uphold pay-as-you-go (PAYGO) rules. So much for promises:

This vote is particularly disappointing as Democrats have gone to great lengths this year to comply with PAYGO rules, particularly on spending. From student loan reforms to expansions of the State Children's Health Insurance Program and Food Stamps, Democrats have negotiated the turbulent fiscal waters of the federal budget responsibly, diligently, even courageously. That is why at this point, after all that work and sacrifice, the compromises and the concessions needed to construct balanced solutions to the AMT problem, it is unacceptable for them to abandon their stated principles of fiscal responsibility because they fear Americans will not accept paying up front for the services and benefits the country demands.

As the statement makes clear, there is plenty of blame to go around in Washington for this policy failure. What an awful way to end 2007.





Posted by Adam Hughes, 12:49:17 PM



Wednesday, December 19, 2007

What's Left of PAYGO? A Promissory Note
The "I'll gladly pay you Tuesday for a hamburger today" Plan

Moments before the last rites were performed this afternoon on PAYGO following a 352-64 vote in favor of an un-paid-for AMT patch, House Speaker Nancy Pelosi promised that it would be revived next year, saying offsets would be found retroactively for the cost of this year's AMT patch before Congress moves forward on a tax extenders and AMT package next year.

Next year? Why should anything be any different next year? Good luck cashing that promissory note -- that's one thing that is never intended to be collected.



Posted by Dana Chasin, 05:31:57 PM



Requiem for a Budget Resolution

The high-water mark of the budget-making process in 2007 may have been Congress' adoption of a budget resolution, a worthy accomplishment rarely achieved in recent years, but hardly a substitute for regular order enactment of appropriations bills pursuant to it.

Why was Congress unable to build on its budget resolution this year, why was it left to whither on the vine? Stan Collander, in A Review Of 2007 offers a cogent explanation:

A budget resolution is a unique kind of legislation; it can't be filibustered in the Senate and doesn't have to be signed by the president, so it is not subject to a veto. As a result, only a simple majority was needed to put the budget resolution in place... Every other budget-related bill needed more than 60 votes in the Senate to overcome a seemingly inevitable filibuster. With congressional Republicans determined not to allow anything to happen that could be considered an accomplishment, gathering the necessary votes became impossible.

Blame cannot be affixed solely on Congress. While leadership was lacking there, the booby prize for fiscal irresonpsibility must be conferred upon the President, expositor-in-chief of the deficits-don't-matter theory. Again, Stan:

The Bush White House continued its policy of talking as little as possible about fiscal policy, the deficit and the national debt, and congressional Democrats had no consistent spokesperson on the budget. As a result, the issue was so in the background in 2007 that there was virtually no mention of the $50 billion to $60 billion increase in the deficit that will occur if there is no PAYGO offset to the one-year alternative minimum tax fix.

The president insisted the AMT fix should not be offset, but never mentioned that the deficit, federal borrowing and annual interest payments would all be higher if his position prevailed. Congress failed to point out the fiscal irresponsibility of the president's position, possibly because lawmakers realized that, without the votes to override a veto, they would likely have to approve the AMT fix without an offset as well.

And in so doing, Congress became a willing co-conspirator in the violation of its own resolution, its one crowning achievement in budget policy this year.



Posted by Dana Chasin, 04:54:38 PM



Congress Demands Investigation of Overuse of Contractors

Walter Pincus reported in the Washington Post on Monday that the fiscal 2008 intelligence authorization bill includes a requirement that Director of National Intelligence Mike McConnell produce a report by March concerning the "activities performed by contractors" in all 16 intelligence agencies and how the outsourcing process at those agencies is overseen.

Apparently Congress is concerned the intelligence community does not understand which functions can appropriately be outsourced and which should be handled by government employees. Perhaps they are also concerned about one estimate showing a core government worker, on average, costs about half as much ($126,500) as a average contracted employee ($250,000). That fact alone is cause for concern. How are contractors supposed to be saving the government money when they are charging twice as much as it would cost the government?

Tom Shoop, who blogs over at Government Executive magazine, quoted another blogger who focuses on the intelligence community who correctly points out the funding structure Congress has implemented has lead to increased levels of outsourcing:

By limiting the number of positions within the Intelligence Community while adding funds for services, Congress set the stage for the wide scale outsourcing we see today, with some 70% of the de facto workforce of the CIA's National Clandestine Service made up of contractors. After years of contributing to the increasing reliance upon contractors, Congress is now providing a framework for the conversion of contractors into federal government employees--more or less.

An interesting aspect to this issue is that Congress has allowed Mr. McConnell the leeway to automatically change positions held by contractors into full-time government positions. McConnell has the authority to increase the size of the intelligence agencies by up to 10 percent.

This approach might be one way to fight back against the raft of outsourcing that has accelerated during the Bush presidency - by giving executive branch personnel the authority to expand government positions automatically rather than having to pound a higher appropriations number through Congress every year for staff increases. I'm curious to see if this tactic will work, and if so, if it will be tried elsewhere in the Federal government. Stay tuned...





Posted by Adam Hughes, 09:53:04 AM



Tuesday, December 18, 2007

Home Mortgage Debt Forgiveness Tax Cut of 2007

The House will take up this week (maybe today) the Mortgage Forgiveness Debt Relief Act of 2007 (HR 3648), a bill designed to mitigate the bite of the housing/credit crisis for cash-strapped borrowers. The legislation would make mortgage debt forgiveness or restructuring not count as taxable personal income. The House originally passed the bill in October, but Senate adopted an amended version. This latest version limits the tax cut to years 2007 through 2009. It must now return to the House before the president can sign it.

The Joint Committee on Taxation has scored the five-year (2008-12) cost of the bill at $168 million, with the primary tax cut in effect from 2008-10.



Posted by Craig Jennings, 05:24:12 PM



It's a PAY-GONE Conclusion

The President and his taxophobic colleagues in Congress, refusing to abide by the rules of PAYGO, have succeeded in giving the lie to their campaign to re-invent themselves as fiscally responsible.

This death-bed conversion for Bush and his Congressional co-conspirators was obliterated for good today, when House Ways & Means Committee Chair Charles Rangel (D-NY) conceded that, while he had long supported Blue Dogs and other defenders PAYGO,

And I agree with them 100 percent except I don't think the voters would understand the problem and so at the present time … I would rather see the people not hit by the AMT and then come back and fight again for pay-go and to close the loopholes and to pay for the AMT, probably with the extenders [likely to come up early next year].

In the meantime, one of two endgames for PAYGO and the AMT patch bill are possible: the Senate adding AMT language to the omnibus spending bill or the House taking up the Senate-modified, un-offset AMT bill as a suspension.



Posted by Dana Chasin, 03:35:00 PM



IRS Budget Cut Below Already Insufficient Levels

The omnibus appropriations bill passed by the House last night contains 3,500 pages and over $516 billion in spending. Yet with all that space (and money), Congress could not find enough room for even their own priorities from earlier this year for the Internal Revenue Service (IRS). Specifics of the IRS's funding take from the omnibus show the House has included $2.15 billion for taxpayer services, down slightly from the $2.155 proposed earlier this year, $4.78 billion for enforcement (down from $4.93 billion) and $3.68 billion for operations (down from $3.77 billion). What's more, the House has backed away from a requirement for the IRS to develop a strategic plan to address the tax gap. The total IRS budget request ($10.89 billion) is $203 million below even President Bush's request!. What is going on here?

So, just to review, despite a year in which congressional hearings revealed that the IRS is underfunded, runs a dangerous and wasteful privatization program, and has no strategic plan for addressing the tax gap, Congress decided to give it less money, allow the privatization program to continue, and let the IRS off the hook for developing a strategic plan.

And I wonder why people don't believe in government...





Posted by Adam Hughes, 03:15:35 PM



Omnibuster: Forget about Topline Spending Cap
Dems Boost Funding Levels, Redirect Money with Impunity

Bush appears to have won the Battle of the Topline, with the House approving an omnibus package (summary; text) accepting President Bush's insistence on the $933 billion cap on total discretionary spending in FY 2008 he requested back in February. On top of that, he will get a $70 billion downpayment on his $200 billion "emergency" spending supplemental request.

So he's not sweating the small stuff. Even though the small stuff adds about $11 billion ($7.5 billion in emergency funding for border security and other initiatives and $3.7 billion in contingent emergency funding for veterans) in off-budget spending -- roughly splitting the difference between his $933 billion budget and the $956 billion provided in Congress' Budget Resolution.

On top of that, we've heard nary a peep out of the White House about reordered on-budget spending in the House-passed omnibus that pulls billions out of Bush priorities and redirects them to Democratic priority programs. The chart below (hat tip: Craig Jennings) identifies the re-arrangement of some of the bigger deck chairs provided for in the House-passed omnibus.

President's Budget Request and House FY 2008 Omnibus Spending Levels
(millions of dollars)
ProgramPresident's RequestOmnibus LevelDifference
Labor-HHS-Education
140,900
144,800
+3,900
Medical research into diseases including Alzheimer's, cancer, Parkinson's disease and diabetes
+613
Rural Health Programs
+147
Centers for Disease Control and Prevention
+393
Low-Income Home Energy Assistance (LIHEAP)
+788
Community Services Block Grant
0
654
+654
Head Start
+114
Pell Grants
+801
Reading First
1,019
393
-626
Homeland Security34,20035,100+900
First Responder Grant Programs
3,400
4,100
+700
Agriculture
17,800
19,200
+1,400
Commodity Supplemental Food Program
0
140
+140
State-Foreign Ops
34,900
32,800
-2,100
Millennium Challenge Corporation
3,000
1,500
-1,500
Transportation-HUD48,00048,900+900
Highway Infrastructure & Bridges
+631
Community Development Block Grants
+566
Energy-Water30,50031,500+1,000
Renewable energy and energy efficiency programs
+486
Strategic Petroleum Reserve
329
187
-142
Global Nuclear Energy Partnership
395
179
-216
International Thermonuclear Experimental Reactor
121
0
-121
List is not comprehensive. Indented lines are constituent parts of non-indented line items.

Sources:



Posted by Dana Chasin, 12:25:49 PM



Pay-As-You-Go Home for the Holidays

The routine matter of passing a resolution to adjourn Congress for the session is getting caught up in the effort to pay for the AMT patch bill.

The adjournment resolution, H Con Res 271, failed by a 184-218 vote yesterday, with members of the Democrats' Blue Dog Coalition using the vote to draw attention to the PAYGO principles, which the Senate violated last week in approving an AMT patch bill without any offset provisions, a move that would add a $50 billion hole to the deficit next year.

In the end, the House won't hold the holidays hostage to PAYGO principles, but the Blue Dogs and others advocating fiscal responsibility won't make it easy for the House to follow the Senate down the deficit hole.



Posted by Dana Chasin, 11:38:22 AM



$515.7 Billion Omnibus Measure Approved by House

With two votes, the House voted to approve $484.7 billion in domestic discretionary and emergency spending (253-154) and $31 billion for spending on the conflict in Afghanistan (206-201).

The Senate will take up the bill today. It is expected that it will tack on about $40 billion in additional war funding. Unlike the House version, which prohibited any of the $31 billion war supplemental to be spent on operations in Iraq, the Senate's $70 billion war spending measure would fund both wars.



Posted by Craig Jennings, 09:32:50 AM



Monday, December 17, 2007

Bush Says His Version of Spending Compromise Might Not Work

President Bush suggested tonight that Congress might want to pass a year-long continuing resolution instead of the compromise bill he forced them to develop. The Hill reports:

If the Congress can't get the job done — in other words, those jet fumes'll start to be moving out … pretty soon here, later on this week — if they can't get the job done, then I've got a suggestion for them, and just pass a one-year continuing resolution.

Seriously? It seems as though the president has gone off the deep end. Is it 2008 yet?





Posted by Adam Hughes, 09:36:03 PM



Congress Close to Deal on Extension of SCHIP?

CQ Today reported ($) this afternoon the Senate is close to a deal on extending SCHIP into 2008. According to the article, a bill is being written to delay cuts taking effect Jan. 1 to Medicare physician pay rates that would include an extension of the SCHIP program. From CQ:

The package also is expected to include a funding extension of the State Children's Health Insurance Program, or SCHIP, but it's uncertain for how long. There appeared to be agreement earlier on an extension until 2009, but the Republican aide cautioned that the situation was "fluid."

House Democrats have been pushing to extend SCHIP funding until September 2008, in order to force another debate on what they see as a winning political issue. A extension until 2009 would certainly make the legislation more palatable to Republicans, however.

SCHIP is set to expire this Friday if Congress does not act to extend it further.



Posted by Adam Hughes, 06:26:38 PM



Bernstein Notes Inequality Widening Apace

EPI's Jared Bernstein has an excellent analysis of the most recent CBO income distribution figures on TPM Cafe.

Over those two years, the growth of inequality transferred $400 billion dollars from the bottom 95% to the top 5%. That is, had the income distribution remained as it was in 2003, the income of each of the 109 million households in the bottom 95% would have been $3,660 higher in 2005.

His whole post is well worth a read.



Posted by Craig Jennings, 01:50:51 PM



IRS Privatization Program Lives Until 2008

More news is emerging from the budget deal reached over the weekend, and this tidbit is not good. The omnibus appropriations bills does not contain any language that would kill or restrict the private tax collection program run by the IRS. The version of the Financial Services Appropriations bill included language that would have stopped the IRS from outsourcing tax collection that was removed from the omnibus.

Despite overwhelming evidence that the program is wasteful and dangerous, and strong support for ending the program, it appears the companies receiving contracts to keep one-quarter of the money they collect have too many political connections. It is possible Sen. Chuck Grassley's (R-IA) key voice and strong support of the program kept language out of the omnibus bill.

I suppose it is back to the drawing board for public protection and privacy advocates - as well as anyone with the least bit of common sense - who strongly opposed the program. If you are someone who owes money to the IRS, watch out! With this program in place, who knows who will come knocking on your door.





Posted by Adam Hughes, 11:19:47 AM



Dems, Bush Strike a Deal on Budget

The Democrats struck a deal over the weekend on the 11 remaining appropriations bills, coming close to President Bush's $933 billion total spending cap, but shifting funding within spending accounts to fund more domestic priorities. As a result, $6 billion was moved out of defense, foreign aid, and military construction to fund domestic priorities such as Amtrak, Veteran's programs, medical research, low-income energy assistance, the Commodity Supplemental Food Program, and other important support programs.

This compromise seems to be about the best that could be expected. It still will cut some programs after adjusting for inflation and population growth, but it is likely better than a long-term continuing resolution.

Wash Post Democrats Tighten Spending in Latest Version of Bill
AP: Budget Bill Reverses Bush Cuts
NY Times: Democrats, Staying Within Spending Limit, Draft Budget with Domestic Emphasis





Posted by Adam Hughes, 09:28:02 AM



Friday, December 14, 2007

Conservatives Killed The FDA

Greg Anrig has a great article on how the conservative approach to budgeting and regulation is to blame for FDA's recent troubles.

It's possible to read all 300-plus horrifying pages of a new Food and Drug Administration subcommittee report describing the agency's slow asphyxiation by prolonged budgetary constraints without learning who is responsible for its decline.

Subcommittee member and attorney Peter Barton Hutt, who served as FDA chief counsel during the Nixon and Ford administrations, pointed his finger at the American public in his own supplemental contribution to the report: "It is not a problem caused by partisan politics. The administrations of President Clinton and President Bush have been equally unresponsive to FDA's needs. ... The country cannot withhold the requisite scientific resources from FDA and then complain that the agency is incapable of meeting our expectations."

But if everyone is to blame, then no one is. Recent fiascoes like the Melamine-tainted pet food and lead-laced Mattel toys, both imported from China, are sure to continue in the absence of meaningful accountability. The truth is that the carnage described in the report is as much a conservative-movement accomplishment as the creation of the FDA was a great progressive-era triumph.

There's more where this came from. Check out his book, The Conservatives Have No Clothes: Why Right-Wing Ideas Keep Failing.



Posted by Matt Lewis, 04:06:41 PM



CBO Releases Long-Term Budget Outlook, CBPP Makes Misguided Statement

CBO released its long-term budget outlook yesterday. Here's CBO Director Peter Orszag's testimony and the report itself. Key excerpt:

The rise in health care spending is the largest contributor to the growth projected for federal spending. Therefore, efforts to reduce overall government spending will require potentially painful actions to slow the rise of health care costs. There may be ways, however, in which policymakers can reduce costs without harming the health of Medicare and Medicaid beneficiaries. Changing those programs in ways that reduce the growth of costs—which will be difficult, in part because of the complexity of health policy choices—is ultimately the nation's central long-term challenge in setting federal fiscal policy.

You'd think that the fiscal policy community would respond to this message by calling for a redoubled effort into controlling health care costs. But to Robert Greenstein, executive director of the Center on Budget and Policy Priorities, the long-term outlook means that we should focus our efforts on enforcing PAYGO budgeting rules.

Moreover, enforcing Pay-As-You-Go rules — and paying for any tax cuts Congress elects to extend (and any entitlement increases) — is within policymakers' power. In contrast, as CBO explains, we probably won't be able to secure the needed reductions in projected Medicare and Medicaid costs without causing serious harm to low-income and elderly patients unless we can slow cost growth throughout the entire U.S. health care system. And while this is the nation's most important fiscal challenge, there is currently no consensus among health care experts about how to accomplish it; achieving such a consensus and fully implementing the appropriate policies could take years or decades.

Why doesn't he ask to speed this process up? Put more money into research, experiment with incentives, implement what the research has already found, ANYTHING that would actually solve the problem, instead of just keeping it from getting worse. He could be asking Congress to both enforce PAYGO and reduce costs. But he clearly prioritizes PAYGO way over trying to control costs now, I guess because he thinks there's nothing we can do. There's plenty to do.

Plus, waiting around for a consensus seems pretty silly. There's no consensus on what to do about a lot of things- basically everything. And the consensus is often wrong. It wasn't that long ago that there was a consensus that the only way to close the long-term budget gap was to raise taxes and cut benefits.

This attitude won't solve the problem. It's a recipe for a continuation of the status quo. At least Orszag gets that much greater emphasis needs to be put on containing health care costs, because that's the most important problem, and not enough is being done about it. Why doesn't CBPP get that we CAN do something about health care costs now? Am I missing something?



Posted by Matt Lewis, 12:15:13 PM



Democrats: Listen To EJ Dionne

EJ Dionne says the biggest thing wrong with the Democrats is that they haven't been good at blaming Republicans for causing legislative gridlock.

What's the alternative to internecine Democratic finger-pointing of the sort that made the front page of yesterday's Post? The party's congressional leaders need to do whatever they have to do to put this year behind them. Then they need to stop whining. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid should put aside any ill feelings and use the Christmas break to come up with a joint program for 2008.

They could start with the best ideas from their presidential candidates in areas such as health care, education, cures for the ailing economy and poverty reduction. Agree to bring the same bills to a vote in both houses. Try one more time to change the direction of Iraq policy. If Bush and the Republicans block their efforts, bring all these issues into the campaign. Let the voters break the gridlock.

If Democrats don't make the 2008 election about the Do-Nothing Republicans, the GOP has its own ideas about whom to hold responsible for Washington's paralysis. And if House and Senate Democrats waste their time attacking each other, they will deserve any blame they get next fall.

Sounds about right. A basic flaw in the 2007 agenda has been the emphasis on legislation that seems middle-of-the-road enough to pass. But Democrats will achieve few substantive policy changes as long as the hard right retains and recklessly uses the power to obstruct. It's probably time to lay down some serious markers and go to the mat for them, just in case.



Posted by Matt Lewis, 11:04:23 AM



Federal Government Funded for One More Week

Congress, Thursday evening, passed a one-week continuing resolution (HJ Res 69) that funds operations of the federal government at 2007 levels through next Friday (December 21).

Meanwhile, rampant speculation on the shape of an omnibus measure continues.



Posted by Craig Jennings, 10:21:21 AM



Thursday, December 13, 2007

A Premature Post-Mortem On The Budget

Perhaps it's too soon to write a post-mortem on the budget debate. Particularly because the Coalition on Human Needs just put out a good summary of how the Bush cuts would impact people, and since they're asking for advocates to call Congress in support of human needs programs.

But here's one anyway. The best message was the "Republicans don't want to to spend money on program X, but they'll spend obscene amounts on Iraq." It probably did a lot of damage. It clarified the hypocrisy and misplaced priorities of their stance and smeared it with the taint of one of the least popular decisions they've made.

But I never heard, or came up with, a good message in favor of the Democrats' budget proposals. Basically we'd trot out some program they knew everybody liked and say "look, support our entire budget because we want to fund popular program X." I think that message was a lot less compelling, judging by the lack of a strong base of support for the Democratic proposals.

Basically, nobody's going to the mat over these budget proposals. Not the appropriations committees, not the leadership. I just don't think anybody's really holding their feet to the fire.

So one immediate thing to take away might be that a compelling critical message is insufficient, given that the hard right still wields considerable power over legislation and will most likely never be deterred willingly. Then again, solid messages on both fronts may not be enough. Next year might be even worse. The opposition, unfortunately, has probably been emboldened by their wins, and the good(er) guys are getting burned by looking "weak" in the press.



Posted by Matt Lewis, 02:28:43 PM



Bush Doesn't Care About Uninsured Children

President Bush vetoed the retooled SCHIP expansion yesterday night, all-quiet like, when he thought nobody was looking. Here's the Center on Budget and Policy Priorities take on it.



Posted by Matt Lewis, 12:26:03 PM



USASpending.gov Launched!

OMB has launched their website that will comply with the 2006 Coburn-Obama Federal Funding, Accountability, and Transparency Act (Transparency Act) today. You can visit it at www.usaspending.gov. OMB really needs to be commended for this site, for launching it two weeks before required under the legislation, and for their commitment to transparency.

For those of you who haven't been to the BudgetBlog before or have, but are still sleepy this morning, you might not notice that the government's website looks an awful lot like FedSpending.org, the site we launched in October, 2006. Well, that's because it basically is FedSpending.org, with a few design changes. As the Washington Post reported this morning, OMB Watch licensed FedSpending.org to OMB for use in compliance with the law (btw, the article is a great insight into the collaboration we've had with OMB over the past year). We will continue to operate FedSpending.org and add more advanced features that make the site easier to use and the data easier to understand. And we hope with a solid foundation, OMB will be able to make timely and eventually more accurate data available to the public through USASpending.gov.

Currently, there are difference between the sites. For instance, OMB will have more timely data as they plan to update the site every two weeks with new data (we currently update data twice a year). In addition, the government site does not have features and upgrades added to FedSpending.org in our last version release, including a mapping feature on all searches, creation of a streamlined and powerful SuperSearch for all advanced searching needs, and increased flexibility in getting data more quickly through expandable summary views.

I have been continually surprised and proud of the success of our endevor to make Federal spending information more available and understandable to the public through FedSpending.org. For it to now be the model for the government's efforts to do the same is feels even better.





Posted by Adam Hughes, 10:16:37 AM



Bush, Republicans Get Their Dream Budget

The Democrats will in fact meet Bush's spending limit. They say they'll try to fund their priority programs over Bush's, and may add funding in "emergency" spending. The worst possible scenario is if they do an across-the-board cut, meaning human needs programs will get cut pretty bad. We'll probably know by tomorrow what the plan is.

The Republican's year-long campaign of obstruction is getting results. These results include: 4 million children to go without health care coverage, maintaining a massive tax loophole for some of the wealthiest people in the country, another year of war and occupation, and the yet-undetermined human damage from cuts in cancer research, Head Start, WIC, and whatever else is squeezed. Congrats.



Posted by Matt Lewis, 10:11:15 AM



Quick Updates: Budget and Tax Developments

Two developments yesterday that are impacting the 2007 congressional end game this month. First, Democrats appear to have reached a deal (i.e. caved) on FY 2008 appropriations: From BNA ($):

Democratic leaders agree in principle to try to meet President Bush's proposed spending target for the 2008 fiscal year, potentially setting aside one of the main stumbling blocks to a deal to wrap up a drawn-out fight over appropriations. However, the bill may not come up for consideration until next week. Despite the major concession by Democrats, other potential issues that could hinder a final agreement—short-term funding for the war in Iraq and various policy provisions—appear unresolved and a short-term continuing resolution is expected, to keep the government funded through Dec. 21

Also, the House has passed another fully paid-for, one-year AMT patch. Also from BNA ($):

The House, in defiance of the White House and Senate, passes a second revenue-neutral patch for the AMT, but also—for the second time—fails to secure a veto-proof margin. The bill passes by 226-193, with three Democrats crossing party lines to vote with Republicans in opposition to the bill.

So it looks right now that President Bush is getting his way on making cuts to important domestic investments that will negatively impact millions of Americans but make no difference in promoting fiscal responsibility and also may also get his way in actively opposing long-term fiscal responsibility by forcing Congress to pass another $50 billion tax cut that will add to the debt. It's dark times in Washington these days. Happy Holidays!



Posted by Adam Hughes, 09:26:47 AM



Wednesday, December 12, 2007

Bush: AMT Revs Unintended, Unexpected, Unwelcome
Funny, His Balanced Budget Plan Assumes and Depends on It

It's getting increasingly hard to sort out fact, fiction, and fantasy when it comes to Bush and the budget. Back in February, Mr. Bush proposed a five-year spending plan that projected a balanced budget by the year 2012. One of the key assumptions in the plan was that the AMT would go unpatched by Congress and continue to produce ever-increasing tax revenues -- a fiscal future fantasy. Without those revenues, the Bush budget would never be balanced.

Of course, everyone knew Congress would patch the AMT. Bush's projected revenue stream could nevertheless continue -- but only if the patch were paid for.

OK, now fast-forward from February to this afternoon, when the White House issued a veto threat against a paid-for patch that protects the revenue stream the Bush budget depends on to reach balance by 2012, saying that "the Administration is extremely disappointed that the House of Representatives continues to demand large tax increases as the price for protecting 25 million taxpayers from an unintended, unexpected, and unwelcome tax increase averaging $2,000."

"Unintended, unexpected, and unwelcome"? Is this now how Bush views his own 2012 balanced-budget plan?



Posted by Dana Chasin, 04:42:26 PM



Time's Justin Fox States It Plainly

Tax Cuts Don't Boost Revenues

If there's one thing that Republican politicians agree on, it's that slashing taxes brings the government more money....If there's one thing that economists agree on, it's that these claims are false. We're not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves--and were never intended to. Harvard professor Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues.


Posted by Craig Jennings, 04:32:32 PM



Budget Fight Is Probably Over; Cuts Expected

Speaker Pelosi is acceding to Bush's budget numbers, cutting $22 billion from the congressional budget proposal. We're asking that they spare human needs programs, but there's not much else to cut. They should be done crafting a bare-bones budget in the next day or so.

This is probably the worst of all possible worlds, probably worse than what's come of the SCHIP fight, considering this budget will mean service cuts, whereas SCHIP just won't be expanded. And there's something disturbing about the behavior of the appropriations committees, who are protecting their earmarks by making cuts in programmatic budget proposals. Why do they care more about (most likely) b.s. local pandering projects than the public interest?

And for more depressing news, President Bush is expected to veto the SCHIP bill today. (Update: This is non-news news, because everyone expected a veto, and the House doesn't have the votes to override the veto anyway.)



Posted by Matt Lewis, 02:05:16 PM



Bush Tax Cuts Illustrated

In addition to the report I wrote about earlier, the CBO has made the data underlying that report available in an Excel spreadsheet.

Like Republicans and tax cuts, I just can't resist graphing income and tax data. So, here you go. This graph represents the shares of after-tax income for the lowest 4 quintiles and the top quintile. I knew the 2001-2003 Bush tax cuts were skewed toward the rich, but this graph really puts things into perspective.


(Click on image to enlarge)


Posted by Craig Jennings, 01:45:04 PM



Note to Norm: Deficits Don't Matter
Leaving a Legacy of Kleptocracy

In "Budget Gridlock Is a Shameful Legacy for Bush and Many Others," in today's Roll Call, leading congressional scholar Norman Orenstein bemoans the shrinking center in Congress and its impact on budget policy, as expressed in the current AMT and budget debates.

Orenstein fingers the GOP for the fix we're in on AMT, sacrificing PAYGO on its altar and having to fix it at all:

Republicans had many opportunities to fix the AMT when they were in the majority, and instead chose their own year-to-year Band-Aids, because they did not want to tell the American people the truth about the long-term budget drain the fix would entail. That was the same reason they pulled a bait and switch on the big package of tax cuts, deliberately having them all expire after 10 years to mask the costs, then trying to extend them by calling inaction a tax increase.

But Norm, you seem to have forgeten the Cheney Axiom, that Deficits Don't Matter to the GOP, which explains

the even more outrageous and irresponsible behavior of the president on the appropriations bills — vowing to veto the latest version of a bipartisan compromise before it was accomplished, showing no interest in working in divided government across party lines, drawing lines in the sand over $11 billion out of a $3 trillion budget. Of course, $11 billion is real money, but this has nothing to do with the numbers or with fiscal responsibility.

Bush Sr. had some notion of serving as a steward of government. By contrast, Jr. is a kleptocrat, pilfering public goods and distributing them to buds and cronies through contracts and tax cuts. So much self-dealing to do, so little time ... to care about deficits.



Posted by Dana Chasin, 01:40:53 PM



Does The Estate Tax Make The Economy More Efficient?

Some interesting research (via Brad Plumer's blog) making the case that the estate tax actually makes the economy more efficient. Here's the abstract:

To what degree should societies allow inequality to be inherited? What role should estate taxation play in shaping the intergenerational transmission of welfare? We explore these questions by modeling altruistically-linked individuals who experience privately observed taste or productivity shocks. Our positive economy is identical to models with infinite-lived individuals where efficiency requires immiseration: inequality grows without bound and everyone's consumption converges to zero. However, under an intergenerational interpretation, previous work only characterizes a particular set of Pareto-efficient allocations: those that value only the initial generation's welfare. We study other efficient allocations where the social welfare criterion values future generations directly, placing a positive weight on their welfare so that the effective social discount rate is lower than the private one. For any such difference in social and private discounting we find that consumption exhibits mean-reversion and that a steady-state, cross-sectional distribution for consumption and welfare exists, where no one is trapped at misery. The optimal allocation can then be implemented by a combination of income and estate taxation. We find that the optimal estate tax is progressive: fortunate parents face higher average marginal tax rates on their bequests.

That's a complicated way of making a common-sense point: having lots of idle rich kids blow their parents' fortunes on parties and expensive shoes probably isn't an optimal use of finite resources. But, as far as I know, nobody really tried proving it in any rigorous way until now.

You could also say the same for dynastic political power (AKA the Bush family), which often goes hand-in-hand with dynastic wealth. That hasn't turned out "optimally."



Posted by Matt Lewis, 11:52:33 AM



Higher Tax Rates = Higher Income Inequality

New figures released by the CBO indicate that overall effective federal tax rates have increased from 20.1% in 2004 to 20.5 in 2005%. Through a process known as "real bracket creep," Americans are paying higher tax rates without changes in the tax code. As incomes grow faster than inflation, taxpayers will find themselves paying taxes at higher marginal rates.

But the real story here is that this increase in effective tax rates is due primarily to increases in income inequality. As overall effective tax rates increased from 2004 to 2005 so did the share of income that goes to the top quintile of the income distribution. Meanwhile, shares going to the bottom four quintiles declined.

And an interesting twist to this report, the overall effective tax rate would have been higher in 2005 except for the fact that income from non-wage sources grew faster than than wage income. Because capital gains tax rates are lower than wage income tax rates, this boost in income actually dragged down the increase in effective federal tax rates.

Shares of Pre- and After-Tax Income, 2004 and 2005
Shares of Pre-Tax IncomeShares of After-Tax Income
Quintile2004200520042005
1st Quintile4.14.04.94.8
2nd Quintile8.98.510.09.6
3rd Quintile13.913.314.914.4
4th Quintile20.419.821.220.6
5th Quintile53.555.150.151.6
Top 10%38.940.935.537.4
Top 5%29.031.125.927.8
Top 1%16.318.114.015.6
Source: CBO, "Historical Effective Federal Tax Rates: 1979 to 2005"


Posted by Craig Jennings, 11:26:12 AM



Cirque du Senate, Take II
Master of the Minority Mitch McConnell's Immodest Turn

In a beautiful, if perhaps unintended, exposition of the hypocrasy of the McConnell legislative obstruction program in the Senate, a New York Times "Congressional Memo: "Muscle Flexing in Senate: G.O.P. Defends Strategy," quotes the Senate Majority Leader today as follows:

I think we are being consistent here against higher taxes, consistently against greater regulation, consistently against creating new causes of action in bill after bill after bill. It's a positive message of our vision of America.

It is a reiteration of last week's Times article, All the Makings of a Carnival, Except the Fun that we highlighted in Cirque du Senate.

So, how well is the McConnell program working? "We have a pretty good sense that the public has figured out they are not too happy with this new Congress." That is, very well indeed. Positively.



Posted by Dana Chasin, 11:20:00 AM



Orszag In The WSJ

CBO Director Peter Orszag editorializes in the Wall Street Journal today on long-term budget problems. It's a great piece. Key excerpts:

The bottom line is that while we need to address the effects of the coming retirement of the baby boomers and the projected imbalance in Social Security, we have to pay even more attention to the health-care costs that exert the dominant influence on our fiscal future. Policy makers will face both challenges and opportunities in trying to reduce these costs...

But it's too soon to conclude that the fiscal picture is hopelessly dismal. There remains the promising possibility of restraining health-care costs without incurring adverse health consequences. It may even be possible in some cases to reduce cost growth and improve health at the same time. Costs per beneficiary in Medicare, for example, vary substantially across the U.S. for reasons that cannot be explained fully by the characteristics of the patients or price levels in different areas.

One thing to look out for is whether congressional leaders or the presidential candidates listen to Orszag. Getting this message in the media seems like a good first step and the best way to challenge the dominant take on the issue, which is epitomized by wretch-inducing Robert Samuelson columns.



Posted by Matt Lewis, 09:44:18 AM



Tuesday, December 11, 2007

New Report: Privatization In The States

The Progressive States Network just put out an excellent report on privatization. It does three things mainly:

  • Documents the failures and dangers of privatizing government on the state level
  • Makes the case for increased transparency of privatized state government
  • And with the data available, measures the extent of privatization on a number of policy areas in each state.

Much of the privatization that occurs at the state level is in the delivery of federal programs, like the National School Lunch Program, Medicaid, or Temporary Assistance for Needy Families. As for its implications for the federal workplace (emph. mine):

While there have been a few highly publicized privatization efforts in some states in recent years, broad trends in public employment do indicate that this is happening within a context of broader stability below the surface. According to the United States Census Bureau, total state and local employment increased from 14.2 million in 199738 to 15.8 million full-time equivalent employees in 2003,39 then to 16.1 million full-time equivalents in 2006,40 showing stable growth in public employment paralleling growth in state populations.

This is actually in sharp contrast to the federal government, which has seen significant downsizing of federal employees in favor of contractors, with total civilian federal employment actually falling from 2.81 million employees in 199741 down to 2.04 million employees in 2003.42 This reflects what Mildred Warner calls the increasing ideological approach to privatization as you move from the local to the federal level.43 It's worth noting that a few of the states most identified with privatization in recent years have strong ideological ties to the current White House, including Florida, where President Bush's brother, Jeb Bush, began a large drive for privatization; Texas, where President Bush's successor as Texas Governor, Rick Perry, led privatization efforts; and in Indiana, where former Bush White House Budget Director, Mitch Daniels, has been strongly promoting privatization as governor. But in this ideological commitment to privatization, they seem to be in contrast to the broader trends across all the states.



Posted by Matt Lewis, 06:07:17 PM



The SCHIP Campaign Is Probably Over

It now appears that the SCHIP expansion is sunk. CQ (subscription) is reporting that a one-year extension for SCHIP, with some additional funds to prevent cuts, will be tied to a bill that tweaks Medicare payments. That means a funding increase will have to wait until probably the year after next.



Posted by Matt Lewis, 01:50:20 PM



Obey Not In It for the Fight

As Dana mentioned in his post earlier this morning, House Appropriations Chair David Obey is abandoning a "split the difference" approach to passing a budget, because the president is sticking to his guns and insisting that any budget presented by Congress total less than his $933 billion "top line" figure. Obey is folding like a cheap suit acceding to Bush's harsh budget because he (and Congressional leadership) would rather not take a black eye for contributing to a shutdown of the federal government.

While I would like to think that Congress feels more than the political pain of a budget fiasco, I am not so certain that there's a whole lot of empathy for the millions of Americans that will be adversely affected by spending cuts in vital domestic programs. And honestly, I'm not sure how Congressional leadership is supposed make the proverbial lemonade here, but come on - lead!

Maybe it's too late to shift the rhetorical melee, but Senate Appropriations Committee Chairman Robert Byrd (D-WV) nails what should be the frame of this skirmish($):

It is extraordinary that the president would request an 11 percent increase for the Department of Defense, a 12 percent increase for foreign aid, and $195 billion of emergency funding for the war, while asserting that a 4.7 percent increase for domestic programs is fiscally irresponsible...


Posted by Craig Jennings, 11:25:47 AM



I Never Thought I'd Want Rosie Back, But...

The newest addition to The View, Whoopi Goldberg, is telling viewers that she wants to repeal the estate tax. Here's EPI's Jared Bernstein on her misinformation campaign.



Posted by Matt Lewis, 11:13:47 AM



The Sound of One Party Negotiating, Part II
Sound and Fury, Signifying Nothing

Another budget deal was scuttled with nine legislative days left in the year when the White House issued a veto threat over the weekend on the "split the difference" approach. It's plus ca change all over again. The only sound you hear, once again, is House Appropriations Chair David Obey, sick and tired of negotating with himself:

"In my view, it's time to fish or cut bait. I'm tired of debating table scraps, and it's clear to me that the White House does not intend to compromise; they intend to sit back like Buddha and keep expecting us to compromise with ourselves. I'm done with navel-gazing. I'm not going to sit here and enable them to chisel domestic money down, down, down, down, so you wind up getting $5 billion bucks in return for $50 [billion] or $90 [billion] or whatever the hell it is they want for the war.

Obey's new "strategy" is to agree to every last spending level requested by President Bush back in February. Oh, minus any earmarks. That really hurts.

Democrats have vowed that if they must cut back on their spending plans, they will attempt to make the GOP pay a political price. "Actions have consequences," said a senior Democratic Senate aide, accoridng to CQ.

So far, there haven't been any.



Posted by Dana Chasin, 10:45:51 AM



Monday, December 10, 2007

Some Good Contracting News

Sen. Jim Webb's office is saying that the Defense authorization act will include provisions to set up a commission to investigate wartime contracting. The bill is expected to pass later this week. It'll be very interesting to what kinds of recommendations and findings the commission produces. The Defense bill will also reform a number of contracting administration rules.

In other contracting news, the state department's inspector general is stepping down under suspicions of blocking investigations into Blackwater's ties to smuggled weapons in Iraq. As it turns out, his brother sits on Blackwater's advisory board and was heavily involved in getting the company to do government security work.



Posted by Matt Lewis, 12:57:36 PM



"A Bad Patch" -- Next Steps on the AMT Bill
House PAYGO Rules Requiring a Waiver Will be Watched

This weekend, the Washington Post editorialized on what it deems "A Bad Patch," the bill moving through Congress to "patch" the Alternative Minimum Tax (AMT). Congress has taken pains to make sure all of its measures this year that raise mandatory spending or cut taxes are revenue-neutral, to comply with the fiscal discipline requirements of the "PAYGO" rules Congress passed this year.

But the Senate dropped the PAYGO ball completely last week, voting 88-5 to pass an un-paid-for patch -- of which 85 percent of the benefit goes to those earning $100,000 or more, incidentally:

Republicans -- who might as well rename themselves the Grand Old Party of Fiscal Irresponsibility -- refuse to pay the $50 billion tab for the one-year fix. They refuse to do away with the "carried interest" loophole that lets venture capitalists and hedge fund operators pay lower capital gains rates on ordinary income, and they refuse to countenance any other method.

The editorial fixes attention on the House Democrats' next move, with the "patch" ball now in their court. At a meeting with the Post editorial board on Friday, House Majority Leader Steny H. Hoyer (D-MD) "was refreshingly frank about the trade-off involved... Asked why Democrats shouldn't be criticized for this choice, Mr. Hoyer said, 'I think you are right to rake us over the coals for passing an unpaid-for AMT.'"

The Senate's PAYGO rules require a point of order to be raised in objection to any legislation that violates PAYGO. No such point of order was raised during the lengthy Senate debate last week. The House rules are different; a waiver vote must occur before any legislation that breaches the PAYGO rules can be voted upon by the House.

We at OMB Watch, and, we suspect, the House Blue Dogs -- who wrote a letter to Senate leaders last Tuesday saying "Waiving PAYGO rules in the face of tough decisions and political pressure is fiscally reckless, an abdication of our duties, and frankly, a broken promise" -- will be watching carefully this week.



Posted by Dana Chasin, 12:57:07 PM



NYT: Social Security Backlog

The New York Times has a great article on backlogs in the Social Security Administration. Another example of where more funding and staffing is needed for government to do its job.



Posted by Matt Lewis, 12:19:22 PM



More Veto Threats For Appropriations

The White House is threatening to veto the latest appropriations gambit. What was it that Einstein said about people who try the same thing over and over again expecting a different result?

Update: Stan Collender's insights into what happened.



Posted by Matt Lewis, 10:03:49 AM



Friday, December 07, 2007

Equality and Individualism

Via (who else but) Inclusionist, I checked out Chapter 6 of Prof. George Lakoff's new book on progressive strategy. Take a look at this paragraph on economic equality:

For progressives, deservedness is understood through the lens of nurturance, which says that someone in need deserves assistance. This satisfies the "human dignity principle," making sure no one falls too far behind. It also fulfills the "common good principle," since the needs of the commons are counted as valid needs that merit attention, besides just the needs of an individual.

By Lakoff's definition, America is not a progressive nation. I've never seen any survey of public opinion showing majority support for this worldview. Lakoff does not provide that evidence, either.

But of course, America is a progressive nation. We have a robust welfare and regulatory state, despite its shortcomings. So what gives?

Lakoff's wrong. His values are not the entirety of progressive values. They are a subset, subscribed to mostly by the poor and intellectuals, and to some extent by the nebulous middle class. Everybody believes in the moral imperative of meeting people's basic needs in an affluent society. But "needs" are defined down to mean the bare minimum of subsistence. That doesn't scale up to a truly equitable society.

Basically, I'm just not convinced that most Americans are empathic altruists or communitarians who think "we're all in this together" when it comes to the economy. We're individualists, concerned generally with the good of ourselves, our families and our friends. I don't think we empathize that well with people we perceive as different. And I don't think we really care how other people are doing, as long as we're getting ours. Check out the work of Matthew Nisbit and Ruy Texiera for more on this point.

That doesn't mean we always hate government or don't care about vast inequalities. I think Americans still believe that government can be a means towards achieving aspirational ends and that government can ensure that opportunity is widely available and that prosperity benefits everybody. Empathy and community, however, are not at the root of this vision of the American dream. Individualism is.



Posted by Matt Lewis, 04:35:20 PM



CBO Monthly Budget Update: November, 2007
CBO estimates that the federal government recorded a deficit of $157 billion for the first two months of fiscal year 2008, about $35 billion more than the deficit recorded for the same period last year. Outlays were about $50 billion (or 11 percent) higher than they were in 2007, while revenues were about $15 billion (or 5 percent) higher.

CBO: Monthly Budget Review



Posted by Craig Jennings, 12:12:23 PM



Cirque du Senate: "Filibustering as if on Steroids"

Les Mots Justes about Enough concerning an almost dysfunctional institution are offered by today's New York Times:

Here... there is trash-talking, whining and finger-pointing, bickering and, occasionally, brief flashes of serious disagreement on policy. But with the clock ticking swiftly toward the end of the year and a stack of stalled legislation piling up, little is getting done in the Senate these days.

...

There is no deal on the federal budget, which is needed to prevent a shutdown of the government. The House and Senate remain divided over how to fix the alternative minimum tax, which will drill a hole in the wallets of 23 million Americans next year... A much-heralded energy bill, which the House approved on Thursday, was expected to fail in the Senate on Friday.

Democrats blame Republican obstruction. "They are filibustering as if they are on steroids," [Senate Majority Leader Harry] Reid said.

The repeated experience of seeing legislation passed by the House during the 110th Congress go directly into the Senate Cemetary prompted this scholarly opinion:

"As an amateur student of constitutional history and as a member of Congress, I have come to the conclusion that the Senate was a historic mistake," said Representative Rahm Emanuel of Illinois, the No. 4 Democrat.



Posted by Dana Chasin, 09:58:39 AM



Thursday, December 06, 2007

The Sound of One Party Negotiating

All Quiet on the Budget Front

The quiet that has descended over Washington amid the cold war on the budget has almost nothing to with the blanket of snow that fell on the town steadily all day yesterday. Instead, we heard essentially the same thing we've been hearing for the last several weeks.

We heard that the soft-spoken White House Chief of Staff Josh Bolten and Mr. Invisible, OMB Director Jim Nussle ventured through the snow yesterday to the Capitol for meetings with congressional leaders on both sides of Capitol Hill. "None of the principals would comment, but sources said the meetings with Democratic leaders yielded no negotiations on overall spending levels," Congress Daily reported.

No negotiations? Even though only one of the twelve budget bills has been signed and we are into the third month of the budget year? Despite widepsread concern about the budget impasse and government shutdowns?

Who needs bipartisan negotiations when you have House Appropriations Chair David R. Obey (D-WI) negotiating -- against himself? "There's a Plan A. There's a Plan B. There's a Plan C," Obey explained yesterday. "But there's no point in talking about it because you just undercut your first preference."

You've noticed that, have you? If you keep splitting the difference, pretty soon there will be no difference.



Posted by Dana Chasin, 06:27:58 PM



Illusionists who Provide no Illusion
The Budget Politics of Objection, Obstruction, and Obfuscation

The lead editorial in today's New York Times, The President's Cynical Budget War, details President Bush's "attempt to repair the Republican Party's threadbare fiscal reputation" by stonewalling the FY 2008 budget process, vetoing every appropriations measure that's hit his desk thus far this year -- except for the spending bill funding the Pentagon.

Mr. Bush is clearly hoping that the public will somehow forget that he is the one who spent the last seven years running up huge deficits and debt with his off-the-books war in Iraq and serial tax cuts customized for his affluent political base. Mr. Bush's Republican allies on Capitol Hill are also hoping that the voters will forget how they abetted the president through all those years. Those fiscal turncoats are now scrambling to pose once more as budget hawks to survive in next year's watershed election.

In all this, the President is ably aided and abetted by his co-conspirators in Congress. As we've learned (see The Filibuster and Fiscal Policy), a party with as few as 41 Senators and sufficient unity can stymie the majority's efforts to perform Congress' only constitutionally mandated responsibility: to provide the federal government with an annual budget, and the money to execute its laws.

Yesterday, Sen. Byron Dorgan (D-ND) took to the Senate floor to describe a spectacle that, sadly, has become all too common:

I sat here for a while this afternoon and saw something quite stunning. My colleague stood up and said, on the appropriations bill that passed the Senate by a wide margin, over 80 votes on transportation-housing and so on, she wanted to bring the conference report up to the Senate. There was an objection by the Republican leader of the Senate: I object.

Then, immediately afterwards, Senator Cornyn from Texas stood up and said: I do not understand what all of the problem is, the way the majority is running this place, why do we not get appropriations bills to the floor of the Senate?

This was immediately after his side had already objected to bringing an appropriations bill to the floor of the Senate. It is as if they think no one is watching. These are illusionists who provide no illusion.



Posted by Dana Chasin, 04:35:54 PM



Important Farm Bill Vote Tomorrow

A key vote on the Farm Bill, which includes increases in funding for anti-hunger programs, is set for December 7th (tomorrow). The Food Research and Action Center and the Coalition on Human Needs are asking people to call their Senator in support of the increases.

The vote is on whether to filibuster the bill, and it's probably even more important than the vote on whether to actually pass it. We need 60 votes to avoid a filibuster. We need only a majority to pass the bill, and previous votes have shown that there's a clear majority in favor of the bill.

Here are CHN's tips for contacting your Senator:

Message: Hungry people can't wait. The Senate must finish its work on the 2007 Farm Bill and pass a Farm Bill with a strong nutrition title as soon as possible in December.

Toll-free line: Use a toll-free line to the U.S. Capitol (1-800-826-9624) that has been made available by AARP while the Senate Farm Bill is pending. (You will hear a short message about the nutrition title before being transferred to an office). Or call your Senators via the Capitol switchboard (202-224-3121).

What's at Stake: The House approved its Farm Bill (H.R. 2419) on July 27th. That bill provides $4.2 billion in new five-year funding for nutrition programs, mainly for food stamps and TEFAP. For food stamps, H.R. 2419, among other things, would raise the minimum benefit, increase the standard deduction, more fully reflect a food stamp household's expenditures on child care, not count extra combat pay against military families, and allow food stamp households to have more in savings and still be program eligible -- by excluding education savings and retirement accounts and starting to index the $2,000 and $3,000 asset limits applicable to most households and households with elderly and disabled members, respectively. H.R. 2419 also provides $250 million per year and then indexes that amount for TEFAP commodity purchases.

The Senate Agriculture Committee voted out its Farm Bill on October 25th, with $4.3 billion in new five-year funding for nutrition programs (of which $3.2 billion would support improvements in Food Stamp Program benefits and accessibility and TEFAP commodity purchases). On November 1st, Senate Agriculture Committee leaders announced a bipartisan agreement to take more than $1 billion in offsets approved in another part of the bill to further strengthen the Food Stamp minimum benefit and asset tests and to increase TEFAP funding. In addition to the asset rule changes contained in H.R. 2419, the Senate bill would increase asset limits from $2,000 and $3,000 to $3,500 and $4,500, respectively. Several pending amendments would build on those provisions, including a boost in the minimum benefit to a more meaningful level.



Posted by Matt Lewis, 03:23:44 PM



Price of Patch too High to Go with PAYGO
Oh, Say Can You See a U.C.?

Far from getting the necessary 60 votes, the effort to pass H.R. 3996, the Temporary Tax Relief Act of 2007 -- a.k.a., the House-passed AMT patch bill -- a PAYGO-compliant, one-year patch accompanied by a provision to close the carried interest loophole and other offsets, was defeated by a vote of 46-48 in the Senate this morning.

The Senate will solider forward in its effort to pass an AMT patch, no doubt. Allowing the AMT to go unpatched by year's end and 20 million new taxpayers to have to pay it is politically unimaginable, but as today's vote shows, the Senate would rather not pay the roughly $50 billion price of the patch -- even at the expense of the PAYGO principles.

I wonder how subtle the Senate will be in waiving those principles formally. Oh, say can you see a U.C.?



Posted by Dana Chasin, 01:48:11 PM



CBO Director Peter Orszag Has A Blog

Check it out. Hopefully this means that we can outsource posts on say, Robert Samuelson's disgusting and wrong column on health care policy?

The Samuelson column really is awful, and if Orszag lays into it publicly, perhaps Samuelson will lose so much credibility that he'll shut up. If you do read it, remember that the central problem with health care is not overspending, but price, i.e. we're buying stuff that isn't worth the price we're paying.

Posted by Matt Lewis, 11:48:26 AM



Wednesday, December 05, 2007

Administration Takes Heat Over FDA Plans

Following up on the release of a scathing report on FDA resources, Bush administration officials testified before Congress today on their plans to reform FDA.

Congress was none too pleased with their plan to shift FDA's resources towards inspecting "high-risk" food, which would mean that many types of food wouldn't be inspected as much. The Wall Street Journal:

The plan requests that Congress give the Food and Drug Administration authority to impose preventive controls on "high-risk" products. Specifically, these are foods "that have been associated with repeated instances of serious health problems or death to humans or animals from unintentional contamination."

The plan would make it more difficult for the FDA to impose such rules, said Mike Taylor, a food-safety expert who worked in the administrations of Presidents George H.W. Bush and Bill Clinton. Mr. Taylor testified before the Senate Committee on Health, Education, Labor and Pensions, which is reviewing the administration's plan.

"Essentially, this provision is a requirement that people be injured or even killed before the FDA can act," said Sen. Edward Kennedy (D., Mass.), who chairs the committee. "Such a requirement undermines the basic goal of preventing illness."

HHS secretary Mike Leavitt claimed that he's requested more money for all the agencies he manages, but didn't say how much he's requesting for FDA.



Posted by Matt Lewis, 03:28:28 PM



CREW Report Details DHS Mismanagement

In the report, CREW details billions of dollars in waste and mismanagement of taxpayer dollars, for example:

  • $24 billion has been spent, and at least $178 million wasted, on the failed Coast Guard Deepwater program;
  • over $600 million has been allocated for unworkable radiation border scanners;
  • $1.3 billion has been lost on the USVISIT program, which was never fully implemented; and
  • projected $2 billion loss on the SBInet "virtual fence" border program.

Read the report, Homeland Security for Sale - DHS: Five Years of Mismanagement



Posted by Craig Jennings, 01:13:26 PM



Tax Expenditures: The Prettier Pork

The Senate is considering an energy bill with a tax component that would repeal some $13 billion in tax breaks for five of the biggest oil companies, ostensibly as incentives for oil and gas production. Bush has threatened a veto and some Senators are bemoaning cuts in corporate welfare. (And at $100 per barrel, I hardly think Big Oil needs any more incentive to find as much oil as possible on American soil.)

The president and his Senatorial enablers talk a big game about "fiscal responsibility" and the evils of earmarks, but when it comes to tax expenditures it's a whole other story.

Image by Flickr user Skrewtape used under a Creative Commons license



Posted by Craig Jennings, 11:38:02 AM



First Spinach, then Lead Toys, Now Mickey Mouse?

If you were slightly sick to your stomach after reading Matt's post yesterday about a drastically under funded Food and Drug Administration and the risks posed to consumer safety, don't think you can get away from that feeling by taking the kids to Disney World this winter for a tropical getaway. The Washington Post published a great investigative report on safety inspections of rides at theme/amusement parks and traveling carnivals. The article uncovered that the Federal oversite agency responsive for inspecting the rides - the Consumer Product Safety Commission (CPSC) - is dangerously overworked and under funded compared to its mission and lacks sufficient authority to adequately ensure public safety.

The Consumer Product Safety Commission, the federal agency responsible for regulating traveling carnival rides, has not required Wisdom or any other ride manufacturer to make safety improvements in the past eight years. After a meeting last year on the Sizzler's troubled safety record, the agency asked only that ride operators pay "greater attention to safety."

The CPSC has no employee whose full-time job is to ensure the safety of such rides. The agency's 90 field investigators -- who oversee 15,000 products, work from their homes and live mostly on the East Coast -- are so overstretched that they frequently arrive at carnival accident scenes after rides have been dismantled.

As a result, critics say, supermarket shopping carts feature a more standardized child-restraint system than do amusement rides, which can travel as fast as 100 mph and, according to federal estimates, cause an average of four deaths and thousands of injuries every year.

Hmmmm...I feel like I've already seen this movie. What's worse, the article points out, is that the CPSC does not even have the authority to inspect larger, permanent parks - called "fixed-site" amusement parks - like Disney World and Six Flags:

State regulators and ride safety advocates say that this record [of lack of inspections and safety problems] is emblematic of wider problems at the CPSC, whose lagging efforts to keep unsafe toys and other children's products from the marketplace have created a public outcry and have brought intense congressional scrutiny. Rulemaking by the agency has decreased during the Bush administration, and its officials say that budget and staffing constraints have made the commission vulnerable to industry pressure to adopt voluntary standards, or, in the case of fixed-site amusement park rides, no federal regulation.

Despite Congress holding hearings on the CPSC and its budget and staffing issues, it is unclear if any change will come this year. With the appropriations process just about broken and Congress and the president continuing to argue over minute differences in funding, the CPSC continues to operate with inadequate resources and poor leadership. Enjoy your trip to Orlando.





Posted by Adam Hughes, 11:17:07 AM



Addressing A Potential Recession With Fiscal Policy

Economists Martin Feldstein and Mark Thoma go toe-to-toe on what to do about the recession that's on the horizon. They agree that fiscal policy is the most important part of the answer, though Thomas wants increased spending, while Feldstein wants tax cuts.

Right now, it looks like the next year in budget policy might be as bleak as this years. But everything could change if a recession hits or gets close to hitting and there are widespread calls for deploying fiscal policy. Then again, the anti-government alliance (President Bush-House/Senate conservatives) has shown in this year's budget debate that it still wields the power to obstruct, and they aren't known for changing their minds when circumstances are different.



Posted by Matt Lewis, 11:13:03 AM



Watcher: December 5, 2007

Congress, President Running Out of Time To Achieve Fiscal Priorities
In our last issue, The Watcher detailed the status of several federal spending measures that have been delayed most of the fall. In this issue, we take a look at what these delays could mean to millions of American citizens.



Posted by Matt Lewis, 10:58:30 AM



Tuesday, December 04, 2007

Senate Vote on AMT Patch/Extenders Likely This Week
Tho McConnell Assails "Status Quo on Tax Policy"

BNA reports that Senate Majority Leader Harry Reid (D-NV) filed cloture today on a motion to proceed to the House-passed, PAYGO-compliant, AMT patch/tax extenders bill. The move sets up a Senate vote as early as Thurs., Dec. 6.

Reid apparently tried and failed to reach agreement with the Senate Republican leadership to hold votes on three versions of the AMT patch and the tax extenders package without amendment, but the GOP continued to insist on floor time for amendments related to extending the 2001 and 2003 Bush tax cuts.

Senate Minority Leader Mitch McConnell (R-Ky.) objects to offsetting any portion of the legislation, saying that by patching the AMT and extending the extenders Congress would be "maintaining the status quo on tax policy" and lawmakers should not permanently raise taxes on some to pay for those policies.

What was that? Maintaining the status quo on tax policy? He doesn't mean extending certain 2001 and 2003 tax cuts, does he?

McConnell's concerns are misplaced; that's not going to happen. As Senate Finance Committee Chair Max Baucus (D-MT) said last week: "[Extending t]he Bush tax cuts will not pass this Congress. There's just no way in the world. They're not going to get 60 votes [in the Senate]."

Or is he suggesting that we change course by letting the AMT go unpatched and the popular package of tax credits and deductions go unextended? That won't happen either.

So just what is this awful "status quo on tax policy" that McConnell wants to do away with? Does he mean PAYGO?



Posted by Dana Chasin, 07:14:02 PM



Report Says FDA Dangerously Underfunded

Funding for the Food and Drug Administration is dangerously low, says a new report by three FDA advisors.

Barbara J. McNeil, a professor of health care policy at Harvard Medical School and one of the report's authors, said she was stunned at the agency's sorry state.

"This was the first time that a group of people got together and really looked at all the areas that the F.D.A. has to cover," Dr. McNeil said. "We were shocked at the scope of its responsibilities, we were shocked at how little its resources have increased, and we were surprised at the conditions those in the F.D.A. had to work under."

Resource mismanagement may have made the E. coli scare earlier this year even worse.

The report notes that the agency's computer systems are aging and prone to breakdowns, "most recently during an E. coli food contamination investigation."

"Reports of product dangers are not rapidly compared and analyzed, inspectors' reports are still handwritten and slow to work their way through the compliance system, and the system for managing imported products cannot communicate with customs and other government systems," the report stated.

Rep. Henry Waxman (D-CA), chairman of the House Committee on Oversight and Government Reform, is demanding answers.

The report also comes on the heels of another report finding that inadequate funding reduced the capacity of the Mine Safety and Health Administation (MSHA), which probably contributed to the spate of recent mine distasters. An underfunded Consumer Product Safety Commission is catching flak for the same thing.

The promise of conservative, small government ideology is not being borne out. Indeed, it has made everything much worse. It feels like just a matter of time before the next underfunded agency fouls up something, which is pretty scary.



Posted by Matt Lewis, 05:00:21 PM



A Lot Of What's Wrong With Privatization In A Single Sentence

Salon reports that President's Bush pick to head the VA works for a government contractor that charges big bucks to help determine who gets health benefits.



Posted by Matt Lewis, 01:20:24 PM



$1 Million a Minute!

In an attempt to have people pay attention to the issue of the national debt, a recent Associated Press article lead with the eye-catching headline of "National Debt Grows $1 Million a Minute." Wow! $1,000,000.00 a minute! That's quite a bit of cash.

The article is well worth a read and should make you even more disappointed that the current Congress is considering waiving PAYGO rules for a patch to the Alternative Minimum Tax (AMT). Such a move would add $50 billion to the debt immediately and the issue will have to be revisited all over again next year because the legislation being considered is only for one year.

If they pass the AMT patch without paying for it this year, I wonder if they will pay for it next year? argh...





Posted by Adam Hughes, 12:15:23 PM



More Insight Into War Funding Debate

More on the war funding debate:

Congress has until mid-February before the Army will cease base operations and until March before the Marines takes similar steps, according to the Pentagon.

Because of the uncertainty, the Pentagon this month will send layoff notices to an unspecified number of civilian employees whose union agreements require 60 days advance notice; the layoffs would be effective next February and could apply to as many as 100,000 civilian employees and 100,000 civilian contractors.

The military is unlikely to stop working to protect troops against roadside bombs until the military is out of money entirely. The Pentagon would freeze less urgent programs before stalling the research effort.

It's misleading to shout from the rooftops that 100,000 DOD employees will be laid off unless Congress approves war funding immediately. But I guess it's standard procedure to issue layoff warnings.

Remind me, what are they fighting over?

Also important to note is that the Democratic proposal would likely have little to no practical effect if enacted into law.

The measure orders that troops start coming home in 30 days _ a requirement that Bush is already on track to meet as he begins reversing this year's troop buildup in Iraq. And the 2008 goal to have most troops home is a nonbinding goal, which means Bush could ignore it.

So it would not tie the hands of military commanders, as Bush suggests, nor would it force a change in strategy, as Democrats say.



Posted by Matt Lewis, 09:36:14 AM



Monday, December 03, 2007

PAYGO-ing Part of the Way

Last week's Going, Going, PAYGONE?, below, is now apparently only a partial report on the state of play on PAYGO, according to Congress Daily.

Word is that a package combining an AMT patch and the tax extenders is in the offing in the Senate. Senate Republicans continue to insist that the patch go un-offset. But a two-year extension of a set of of popular individual and business tax credits and deductions, including the state and local sales tax deduction, the Work Opportunity Tax Credit, and the Welfare-to-Work Tax Credit and the R&D credit would be offset, as required by the PAYGO rules.

PAYGO would be observed, then, but perhaps only in the breach.



Posted by Dana Chasin, 07:15:11 PM



The Filibuster and Fiscal Policy
The Modest Master of the Minority, Mitch McConnell

An article in yesterday New York Times, How the Filibuster Became the Rule illuminates the role of the rule in frustrating the efforts of a majority in Congress to complete work on the FY 2008 budget, which appears to have ground to a halt. A filibuster is a legislative tool to speak or debate on the floor or threaten to do so until there are enough votes -- 60, under U.S. Senate rules -- to invoke "cloture," bringing the debate to an end and allowing a vote on the underlying bill.

Senate rules allow filibusters and the efforts to overcome them are being used more frequently, and on more issues, than at any other point in history... The filibuster and the cloture motion will likely be employed even more as the Senate returns from its Thanksgiving recess on Monday to face a jam-packed calendar, motivated by the need to pass crucial annual budget bills to avoid a government shutdown.

A party with as few as 41 Senators and sufficient unity can stymie the majority's efforts to perform Congress' only constitutionally mandated responsibility: to provide the federal government with an annual budget, and the money to execute its laws.

A Senate minority leader couldn't be expected to claim credit for such a fiscal catastrophe. Instead, Sen. Mitch McConnell (R-KY) says, "Congressional Democrats have neglected their duty on the 12 spending bills... and they're also about to slap millions of Americans with a middle-class tax hike better known as the A.M.T.," wiping his fingerprints off the current budget deadlock -- even though he knows the Democratic-controlled House has passed every single one of the twelve spending bills in this year's budget, as well as another bill to prevent "a middle-class tax hike better known as the A.M.T." Six of these bills are still stuck in the Senate.

McConnell's too modest to claim credit for the current fiscal stalement... or responsibility if there is a government shutdown. But would he forswear the filibuster for the forseeable future for the sake of fiscal responsibility? "I think we can stipulate once again for the umpteenth time that matters that have any level of controversy about it in the Senate will require 60 votes."



Posted by Dana Chasin, 06:24:59 PM



Profile In Spending: Trade and Globalization Assistance Act of 2007

I wanted to highlight the Trade and Globalization Assistance Act, yet another progressive spending bill that's bottled up in Congress and that the President has threatened to veto.

Its main provisions improve the unemployment insurance system and the trade adjustment assistance (TAA) program. The act costs about $9 billion over ten years- just a blip in the context of $3 trillion budgets, but a major deal for the workers who'd get better benefits. And it's a deficit-neutral bill, mostly paid for by renewing an unemployment insurance surtax.

The changes to the unemployment system are well summarized by this Coalition on Human Needs' report . Essentially, the federal government would provide stronger incentives to states to expand their programs. Low and middle-income workers in particular would benefit, as unemployment insurance could better help part-time workers and people who are employed sporadically. It may also help people who leave work for family reasons and workers in a retraining program.

As for TAA, the bill would expand coverage, increase benefits and provide more worker retraining. For a comprehensive summary, see the Congressional Budget Office's cost estimate.

TAA is a pretty small program. Workers are eligible for TAA if they can prove they lost their job due to trade. In FY 2006, only 120,000 workers were certified eligible, and only half of them received benefits. This bill will give the program a much-needed expansion, though there's room for more. Dean Baker of the Center for Economic Policy Research has written that the program does nothing to reduce the downward pressure that trade puts on wages.

The House passed its version in late October, which the President threatened more or less to veto. The Senate's bill has been moving very slowly and looks less progressive than the House version. These programs' authorization expire on Dec. 31, so Congress will have to do something before the year is out.



Posted by Matt Lewis, 05:21:23 PM



Does the President Still Object to Providing Health Insurance to Low-Income Children?

We'll know soon.

BNA's Daily Tax RealTime (no link, sorry):

President Bush formally received Congress's second attempt to pass an extension of the State Children's Health Insurance Program (H.R. 3963) Nov. 30, requiring him to again decide whether to veto the bill over its inclusion of tobacco tax increases and program expansions.

The bill would pay for $35 billion in new spending in the bill by raising the federal tobacco excise tax for cigarettes to $1 per pack, from 39 cents per pack, and by sharply increasing the tax rates on cigars and other forms of tobacco.



Posted by Craig Jennings, 03:31:37 PM



There's Enough Money For The War To Last Until About March

The Defense Department keeps threatening to cut back program activities if a war supplemental isn't passed immediately. Here's more evidence that they're bluffing or lying. From page 3 of a Nov. 9th CRS report (emph. mine):

With passage of the regular FY2008 DOD Appropriations bill, DOD no longer has access to the $70 billion provided as a bridge fund in last year's appropriation.1 DOD can, however, case flow or finance war cos