CongressDailyAM (subscription only) brings us a breakdown of the discretionary spending in the House's FY07 budget:

(in billions)

So far, two of these appropriations have been passed by the House: Agriculture, at $93.6 billion, was passed on Tuesday (378-46) and Energy-Water passed (404-20) last night to the tune of $30 billion.

It turns out that a seemingly small budget cut to the IRS results in lost tax revenue many times over. Senate Finance Committee ranking member Max Baucus estimated earlier this week that a 1 percent cut to the 2006 IRS budget -- an amount of $100 million -- will actually cost the Treasury roughly $1 billion in lost tax collections.

As Commissioner Mark Everson reported earlier this month, and as a GAO report from 2003 indicated, each dollar spent raises approximately $11 - $13 of revenue. Sen. Baucus stated,

Well Baucus, it may be one way, but there are other ways to keep the deficit down too. One would be to retain the estate tax. Another would be to implement full PAYGO laws. Closing the tax gap is certainly an important goal, but it is one piece in a very large puzzle.

House and Senate conferees have failed to reach an agreement on the emergency supplemental spending bill, and so the bill will not reach the president’s desk before the Memorial Day recess. Congress will take up the haggling again after the break as the Pentagon has warned lawmakers that it will run out of funds at the end of June.

Maybe they could hold a bake sale or something.

We’ve been looking at the costs of the president’s border security plan and its impact on the emergency spending bill making its way through Congress. Bush would have the money for his border plan be offset by reducing some military spending, but that begs the question: where else can Congress find almost $2 billion in a $94 billion bill?

There’s certainly lots of pork that could be cut - Trent Lott’s $700 million railroad to nowhere, for example. Peter Whoriskey reports today in the Washington Post how the supplemental spending bill is being divvied up by special interests. But more important than who is getting the money is who is not getting the money.

Eddie Favre is mayor of nearby Bay St. Louis, a small city that bore some of the worst of the storm surge. He said he found it difficult to support the purchase of the CSX rail line because of the more pressing demands he faces.

The city's property tax base has dropped from $87 million to $27 million because of the destruction, he said, and the city is in dire financial straits.

The railroad purchase "may be a great project, but to me there's a lot more pressing needs that the $700 million could cover," he said. "I don't know how I'm going to pay our police. I don't know how we're going to pay our teachers. I don't even know if there is going to be a city anymore."

There are a lot of homes in the Gulf Coast region destroyed by Katrina that will not be rebuilt with Katrina reconstruction funds because small communities and citizens have no voice in Congress. Lobbying reform has all but completely dropped of the radar screen of Congress, yet it is even more pressing that our lawmakers be responsive to the needs of its citizens and not their favorite lobbyists or campaign contributors.

The president officially submitted his request for funds for his border security plan to Congress last week. The $1.9 billion is to be included the emergency supplemental spending bill currently being negotiated in Congress. To further complicate an already-antagonistic negotiating process, Bush continues to threaten to veto the bill should it exceed $94.5 - a spending limit imposed by Bush before this $1.9 billion shopping spree.

The funds are to be spent by the National Guard and the Department of Homeland Security (in millions):

National Guard: $756
Department of Homeland Security (allocated as follows): $1,172

1,000 new Border Patrol agents	$330
Increased physical security	$325
More Air support	$95
New facilities and equipment	$80
Detention beds	$80
Detention staff	$100
Increased removal and transportation	$97
Assisting state and local efforts	$65

To keep the total below the veto-enforced limit, Congress is mulling its options as to which other funds should be cut. The White House's request, however, is accompanied by proposed offsets. CongressDaily reports (subscription required) that the plan calls for cuts in military spending including forgoing purchases of "armored vehicles, heavy trucks, radios, generators, replacements for downed helicopters and armor kits for soldiers."

President Bush has officially asked Congress to fund his $1.9 billion border security initiative. The $1.9 billion in border security expenses is to be inserted into the supplemental spending bill currently making its way to conference. Incidentally, $1.9 billion is about the same amount of a border security provision that Senate Budget Committee chairman Judd Gregg (R-NH) authored. In fact, even the offsetting funds in both Bush's and Gregg's plans would come from the same line item.

Perfect - same amounts, same offsets - so, what's the problem?

Gregg's provision would provide only infrastructure improvements to the border, like watchtowers and fences. The president's plan, however, emphasizes border patrol program related activities by allocating over $750 million for a National Guard deployment, $330 million to hire 1,000 additional border patrol agents, and $340 million for border patrol activities. Also included in the president’s request is $500 million for some infrastructure improvements and surveillance equipment.

Hoping to have the supplemental passed by Memorial Day, Bush sent his Chief of Staff, Josh Bolton, to the Hill in an effort un-ruffle some feathers. However, it is not certain that Bolton was successful in his bid to move the bill closer to a vote.

Negotiators for the House and Senate have agreed to back down on including extra funding within the supplemental spending bill, and are doing so to avoid a veto fight with the White House. The emergency spending bill, which is set to fund war efforts (which after this long should not be funded through the emergency procedure) and hurricane disaster relief, will most likely cost no more than $94.5 billion.

This amount is significantly closer to Bush's initial $92.2 billion limit, but far less than the $109 billion supplemental bill passed by the Senate May 4. That bill garnered intense criticism from Republicans, including Majority Leader Frist (R-TN), for including excessive spending on non-emergency earmarks, and circumventing the standard budget process to do so.

At 1:30 AM last night the House passed their version of the budget resolution after Majority Leader Boehner had repeatedly put off the vote because he didn't have enough support to pass the bill. The $2.8 trillion measure, H.Con.Res. 376, just barely passed 218-210 after moderates led by Rep. Mike Castle (R-DE) decided to support the measure. The moderates had originally proved to be a thorn in the side of the leadership on this vote but ultimately caved yesterday, agreeing to support the resolution even though the deal they were seeking (for an additional $3.1 billion for health and education programs) came in the form of a promise as opposed to real changes in the resolution. Apparently Castle and others received assurances that this extra money would not come from cuts to Medicaid, Medicare, food stamps, or other programs for the needy.

Rep. David Obey (D-WI), a Democrat in strong opposition to the budget resolution, was particularly critical of the moderates, saying: "I was wondering whether the Republican moderates were going to stick to their guns when they said that they knew that it was wrong to pass a budget that provided $40 billion in tax cuts for people who make a million dollars a year while you're squeezing the guts out of education and health programs. We now know the answer. They are doing a poor imitation Bert Lahr, the cowardly lion in the Wizard of Oz.... The fact is, they are now selling out for a promise that if some time in the deep dark distant future somebody does something to change this budget resolution, then there might be a table scrap or two left for additional education and healthcare." Lawmakers generally are not expecting a conference agreement on the measure to be worked out with the Senate, which passed a bill spending $16 billion above the House version.

Zero Democrats crossed the aisle to support this budget resolution, although three, Kennedy (D-RI), Larson (D-CT), and Stupak (D-MI), did not vote. Twelve Republicans rejected the budget. These were Fitzpatrick (R-PA), Gerlach (R-PA), Goode (R-VA), Hostettler (R-IN), Johnson (R-IL), Jones (R-NC), McHugh (R-NY), Otter (R-ID), Ramstad (R-MN), Renzi (R-AZ), Sweeney (R-NY), and Wilson (R-NM).

The Budget Resolution Increases the Debt Limit

Authors of the budget resolution slipped in easy-to-overlook yet very important language concerning the U.S. debt limit, which Congress last raised by $653 billion on March 16. Passage of this bill would automatically increase the debt limit again to almost $10 trillion next year, and has it moving to $11.3 trillion by FY 2011. This provision is nothing more than House leaders trying to pull one over on the American people. An automatic increase of the debt limit would free them from having to actually vote on an increase next year, and would allow them to avoid the (well-deserved) scrutiny that would accompany the fifth debt ceiling increase since President Bush took office. If the debt limit increases to $10 trillion next year, it would mean that the level of federal debt will have increased under President Bush by almost $4 trillion. When he took office, the debt ceiling sat at $5.95 trillion. No President has come close to increasing it a fraction of what Bush has done. The language to increase the debt limit can be seen in the bill on page five.

House Republican leaders are planning to VOTE TODAY ON THE BUDGET RESOLUTION. The vote is not assured and your call is crucial!

Call your Representative toll free at 800-459-1887 and tell them to vote NO on the irresponsible budget.

Last year Department of Homeland Security head Michael Chertoff declared that deploying the National Guard to the Mexican border for border patrol activities would be "a horribly over-expensive and very difficult way to manage [the illegal immigration] problem."

CQ's Patrick Yoest reports:

“Why don’t you put the National Guard on the border to back up the border patrol and stop the bleeding, and then start to increase the Border Patrol, the high-tech and all of that?” [Fox News talk show host Bill] O’Reilly asked…

"Well, the National Guard is really, first of all, not trained for that mission," Chertoff told O'Reilly. "I mean, the fact of the matter is the border is a special place. There are special challenges that are faced there."

Chertoff added that that it would take a huge amount of National Guard troops, that they would need new training. But couldn't the National Guard pull it off, O'Reilly asked?

"I think it would be a horribly over-expensive and very difficult way to manage this problem," Chertoff said. "Unless you would be prepared to leave those people in the National Guard day and night for month after month after month, you would eventually have to come to grips with the challenge in a more comprehensive way."

Last night, President Bush unveiled his shopping list for immigration reform. Without once mentioning the cost or a way to finance the latest splurge, Bush asked the American people to once again open up their collective wallet and pony-up the plastic for another spending spree. However, given Bush’s predilection for deficit-spending, it won’t just be the American people, but our children and grandchildren who will be footing this bill.

Some of the items on the shopping list:

• 6,000 border patrol agents
• 6,000 National Guardsmen
• border patrol missions for state and local authorities
• a temporary worker program
• "tamper-proof" work documentation employing biometric technology
• unmanned aerial vehicles
• infrared cameras
• motion sensors
• patrol roads
• barriers

Despite lacking a budget resolution, the House of Representatives is expected to take up its first three appropriations bills this week, likely starting with the Agriculture bill on Wednesday. Because they have yet to pass a resolution however, the House will have to establish a discretionary spending cap before they can consider the first appropriations bill on the floor. To do so, the House would likely add a "deeming resolution" to the first bill on the floor.

A deeming resolution is necessary in the absense of a budget resolution to allow the apporpriations process to move forward. It is unclear if the House would approve the discretionary budget cap in a deeming resolution of $873 billion (the president's requested funding level and the amount included in the still pending budget resolution). If there were sufficient votes to approve such a provision, the House should have been able to pass the budget resolution already.

A more likely scenario would be an individual cap on each appropriations bill as it is considered on the floor. This would continue this chamber's finely tuned sense of irony because the essential purpose of the budget resolution is to start from a wide view and not construct a budget piecemeal. I suppose this should not come as a surprise however as this House really has never concerned itself with good process over the last few years.

Thursday evening the Senate passed the almost $70 billion tax reconciliation bill, by a vote of 54-44. Sens. Rockefeller (D-WV) and Specter (R-PA) did not vote. Democrats who crossed the aisle to vote with Republicans were Nelson (D-FL), Nelson (D-NE), and Pryor (D-AR). Republicans who crossed the aisle were Snowe (R-ME), Chafee (R-RI), and Voinovich (R-OH).

Voinovich spoke extensively on May 3 on the Senate floor about the fiscal state of the U.S. and about how this is not the time to be continuing to irresponsibly cut taxes. He said:

Some members believe that the solution is to grow the economy out of the problem, that by cutting taxes permanently, the economy will eventually raise enough revenue to offset any current losses to the U.S. Treasury. I respectfully disagree with that assertion.... In November 2005 former Federal Reserve chairman Alan Greenspan testified before the Joint Economic Committee and told Congress: 'We should not be cutting taxes by borrowing.'... Instead of making the tax cuts permanent, we should be leveling with the American people about the fiscally shaky ground we are on.

More on Voinovich's comments can be read in this Washington Post column.

The $70 billion tax measure will extend Bush's cuts to tax rates on dividends and capitol gains through 2010. The bill also provides protection from the alternative minimum tax for 15 million families for this year alone. While this AMT relief does promote fairness within the tax code, it also signifies that Congress has once again failed to come up with a permanent solution for the tax, and has instead passed an expensive and short-term "patch" rather than dealing with the problem once and for all.

Republicans argue that this bill will spur growth by extending investment tax breaks; in reality this bill will do little to help the average American taxpayer. The "revenue raiser" in this bill is also argued to be little more than an accounting gimmick that will offset some of these costs now, but will come back with a vengance to starve federal coffers once we get beyond the ten-year scope of federal revenue estimates. More on that subject can be read in this CBPP report.

Washington Post: Senate Passes $70 Billion in Tax Cuts

Tax Policy Center: The IRA Conversion Provision in the 2006 Tax Reconciliation Bill

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