Federal Budget & Tax

Federal Budget & Tax: News Blog Background

Monday, October 25, 2004

"In These Times" Critical of Bush's Federal Economic Policy

"In These Times," a magazine committed to extending political and economic democracy, is publishing a series of retrospective analyses of the Bush record this week. Along with tackling foreign policy, education, health care, and a variety of other issues, the series highlights five different economic areas where Bush's policies have gone awry. The article focuses on:

- Bush's jobs loss record

- The unprecedented rise in home prices

- The overvalued dollar and the trade deficit

- The threat that structural budget deficits will continue far into the future

- The effects of massive military spending on the U.S. economy

The article can be found here.

Posted by Becky Lewis, 05:56:14 PM

Thursday, October 21, 2004

EPI Studies Shed Light On Current Economic Situation

The Economic Policy Institute released two important studies this week that offer insight into how federal fiscal policies can and do impact people.

The first study, a book titled “Exceptional Returns: Economic, Fiscal, and Social Benefits of Investment in Early Childhood Development,” argues that increased investment in Early Childhood Development programs (ECD’s) will have financial payoffs for society in the future. If the government increases spending now to provide quality education and development programs for low-income children in the early stages of life, society will end up paying significantly less in the long run in terms of costs for remedial and special education, criminal justice, and welfare benefits.

The study highlights the fact that a publicly financed, comprehensive ECD program for all children from low-income families would cost billions of dollars annually, but would create much larger budget savings over time. Policies that will serve to generate billions of dollars in budget benefits should not be ignored. This month the Congressional Budget Office reported that the final deficit for FY 2004 was $413 billion; as this study proves, however, by investing now on current programs, society will end up saving a lot of money in the future. Click here for more information on the deficit.

EPI’s second report, released today, is called “Less Cash in Their Pockets: Trends in Incomes, Wages, Taxes, and Health Spending of Middle-Income Families, 2000-2003.” The report examines certain income trends and highlights the fact that the economic well being of middle-income families has changed significantly over the last few years; and that specifically, many middle-income families lost ground between 2000 and 2003 and now have less income available to meet their needs.

Both of these important reports can be found the Institute’s web site, www.epinet.org. Their findings call into question some of the economic policy decisions that have either been made, or overlooked, by the executive and legislative branches of this country. As we face the highest deficit we’ve ever seen, it is important to keep in mind both how tax cuts really affect the middle class, and what kinds of investments the government can make now to help our economy in the future.

To learn more about how recent tax cut legislation will affect the middle-class families, read this report from the Center on Budget and Policy Priorities.

Posted by Becky Lewis, 04:45:53 PM

Tuesday, October 19, 2004

Watcher: October 18th, 2004
Federal Budget

Posted by Becky Lewis, 06:23:21 PM

Monday, October 18, 2004

Public Citizen Reports on Homeland Security

Today, President Bush signed into law the Homeland Security appropriations bill, which was passed last monday by the Senate in a special Columbus Day session. The $33 billion bill is only the second to be passed by Congress and signed by the President, along with the Defense appropriations measure.

Also today, Public Citizen, a Washington, D.C. based non-profit organization, released a major report asserting that this administration has failed to protect infrastructures critical to National Homeland Security. The report, Homeland Unsecured, asserts that not enough has been done to ensure the protection of chemical and nuclear plants, hazardous material transport, seaports, and drinking water systems. In the report, Public Citizen argues that the White House has hindered steps to strengthen security at chemical and nuclear plants, has failed to make the transportation of hazardous materials more secure, and hasn't taken the necessary action to ensure the safety of drinking water or secure the nation's ports.

A copy of Public Citizen's report can be found here.

Posted by Becky Lewis, 05:11:21 PM

Thursday, October 14, 2004

Hitting the Debt Ceiling
CNN is reporting that the Treasury is having to take measures to avoid going into default...

U.S. dangerously close to debt limit
The Treasury Department suspended investments in a federal employee pension fund Thursday to keep the government below its borrowing limit, Treasury Secretary John Snow said in a letter to Congress.
Snow said payments to the $56 billion Federal Employee Retirement System's Government Securities Investment Fund, known as the G-fund, would be restored once Congress raises the $7.384 trillion debt ceiling. [...]
The government was just $10 billion below the limit as of Tuesday, according to the latest available data.
Congress adjourned for an election break last weekend without raising the politically sensitive limit. [...]
Congress has already raised the debt limit twice during the Bush administration's tenure, in 2002 and 2003.

Posted by John S. Irons, 01:18:34 PM

Thursday, October 07, 2004

CBO Releases Preliminary Deficit Numbers for FY2004

Last month the Congressional Budget Office (CBO) projected a $422 billion deficit for fiscal year 2004, and a $348 billion dollar deficit for FY2005. To see an OMB Watch analysis of this baseline projection read "Beyond the Baseline: 10 Year Deficits Likely to Reach $5.5 Trillion." As it turns out, the preliminary estimate released today is approximately $7 billion less than the CBO stated last month, according to their most recent Monthly Budget Review. Now they are reporting that the federal government incurred a deficit of $415 billion in FY2004.

This preliminary deficit figure is about $41 billion more than the FY2003 deficit, and 3.6 percent of the national Gross Domestic Product (GDP). Although it was reported that annual receipts rose by approximately 5.5 percent, they remain about 7 percent below their peak level in FY2000. And, according to the monthly review, individual income tax receipts remain approximately 25 percent below their peak in 2000. The drop in those receipts can be attributed to the recession, the decline in the stock market, and the Bush administration's tax cuts, the most recent of which were passed last week in a $146 billion package.

Interestingly, over half of the increase in receipts for FY2004 came from corporate income taxes, which ended up totalling approximately $57 billion more than they did in 2003. Federal income taxes paid by corporations can effectively serve to offset government outlays, and can bring down the budget deficit. Despite this fact, a study released in late September by the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ) found that between the years of 2001 - 2003, 275 of the nation's largest companies did not pay their fair share of income taxes; in addition many received excessive tax rebate checks.

A copy of the ITEP/CTJ report can be found here. Perhaps if corporations paid their fair share of taxes, and if federal legislation stopped handing out so many corporate tax breaks, we would see a decline in the deficit, which has been rising consistently since 2000.

Note: The figure $415 billion is the preliminary estimate for the national deficit; the Department of the Treasury will release the actual figure later this month.

Posted by Becky Lewis, 03:19:18 PM

Wednesday, October 06, 2004

Overtime Amendments Stripped Out in Conference

Today, House and Senate conferees engaged in final meetings to complete work on the massive corporate tax bill. In doing so they defeated a Democratic amendment on overtime rules that had been passed by a Senate committee. The amendment, sponsored by Senator Tom Harkin , proposed to restore overtime rights while preserving an inflation adjustment to the minimum salary that determines automatic overtime eligibility. The amendment would have banned the Department of Labor from enforcing new overtime pay rules.

Its passage in committee was considered a huge victory for labor rights, and showed that many Congressmen were willing to stand up against the administration's new overtime proposals.

Unfortunately, as has happened in the past, conferees blocked the Senate amendment today. The amendment had been attached to the tax bill. Senator Harkin expressed frustration that his amendment has been approved six times by both chambers, but has always been stripped out in conference.

Posted by Becky Lewis, 06:00:24 PM

The Numbers on FSC/ETI

Yesterday, the Joint Committee on Taxation released an updated score on the "chairman's mark" of the FSC/ETI bill. (See http://www.house.gov/jct/x-68-04r.pdf.)

Overall, the score raises $238 million in revenue, although there are several gimmicks which are used to keep the costs down (see http://www.cbpp.org/10-4-04tax.htm.)

The repeal of the exclusion of ETI will cost $57.7 billion.
Under title VIII, there are revenue provisions to close loopholes and raise some fees, which raise a total of $81.7 billion

The revenue enhancements from the repeal of the ETI regime and the loophole closings thus total $139.4 billion. (Note that this total would come close to paying for the $146 billion price tag of the "middle class" tax cut.)

Rather than using this money to finance cuts in other areas of the tax code or pay off the debt, the bill gives over $139 billion in additional tax cuts primarily to businesses.

Posted by John S. Irons, 12:47:56 PM

Tuesday, October 05, 2004

Watcher: October 4th, 2004
Federal Budget

Posted by Becky Lewis, 01:58:17 PM

Monday, October 04, 2004

Long-term Fiscal Situation - USA Today Style

USA Today lays out some of the longer-term numbers on the nation's fiscal health, and what needs to be done to bring the system into long-term balance.

$84,454 is the average household's personal debt. $473,456 is the average household's share of government debt, including Medicare and Social Security. The government isn't asking you to pay it. Yet.
By Dennis Cauchon and John Waggoner USA TODAY
The long-term economic health of the United States is threatened by $53 trillion in government debts and liabilities that start to come due in four years when baby boomers begin to retire.
The “Greatest Generation” and its baby-boom children have promised themselves benefits unprecedented in size and scope. Many leading economists say that even the world's most prosperous economy cannot fulfill these promises without a crushing increase in taxes — and perhaps not even then.

Posted by John S. Irons, 05:04:19 PM

Balanced Budget Amendment Out of the Limelight For Now

A week after the House Judiciary Committee met to consider a constitutional amendment to balance the budget, Republican House leadership has decided to drop work on the legislation. This decision was made after the September 22 committee drafting session, during which Democrats offered numerous amendments to attach to the legislation. When it came time to vote the committee did not have quorum, and nothing was accomplished.

House members in support of the Balanced Budget Amendment seem to have gotten the message that besides the fact that the amendment is widely unpopular, there are also more pressing issues for them to be debating at this time.

The amendment - which proposes a constitutionally mandated requirement to balance the budget every year - would have terrible economic consequences, which many committee members have recognized. It was even unpopular among some committee Republicans. Rep. Jeff Flake (R-AZ) is quoted in a Washington Post story as saying, "We can limit deficits on our own.... We in Congress ought to be embarrassed by what has happened. We ought to be ashamed of ourselves."

For now we can breathe a sigh of relief that House members have dropped work on this economically harmful amendment. To find out more about the amendment, and why it's adoption would be costly to the U.S. economy, click here to read a Clinton-era Treasury Department memo by Brad DeLong.

Posted by Becky Lewis, 12:22:33 PM

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