A recent Congressional Research Services report has estimated that extending the '01, '03, and '04 tax cuts will cost the Treasury $2.286 trillion over 10 years. The CRS cost estimate was based on Congressional Budget Office estimates and calculations by the CRS, according to the report.

This estimate dwarfs the recent efforts of Congress to cut back on spending. Before recessing for Thanksgiving, the House passed a $50 billion "Deficit Reduction Bill," and the Senate passed a smaller $35 billion version, mostly with cuts to social welfare programs. Congressmen have been patting themselves on the back for these acts of fiscal discipline, yet extending the tax cuts -- whose benefits go primarily to the wealthy -- will wipe out any savings generated by the spending cuts and increase long-term deficits.

As you are likely aware, yesterday Rep. Randy ''Duke'' Cunningham (R-CA) pleaded guilty to conspiracy and tax charges and resigned from office. Cunningham admitted to taking $2.4 million in bribes to steer defense contracts to conspirators. He entered pleas in U.S. District Court to charges of conspiracy to commit bribery, mail fraud and wire fraud, and tax evasion for underreporting his income in 2004.

House Ethics rules say that any lawmaker convicted of a felony should no longer vote or participate in committee work. Cunningham's resignation means Republicans have one fewer vote in favor of the contentious and harmful budget and tax bills the House will be working on this month. That narrows the margin of support for the spending cuts bill to only one vote.

Following up on a previous blog posting regarding Sen. Tom Harkin's (D-IA) amendment to the reconciliation tax bill yesterday, it appears that some of his original supporters deserted him during the actual vote. His amendment, which was defeated 50-46 would have increased the amount appropriated to carry out programs under the Community Services Block Grant Act. It failed despite the fact that fifty-eight Senators signed a letter November 9 stating their support for upholding CSBG funding at $637 million in negotiations with the House on the Labor/HHS bill.

It is interesting then that Harkin’s amendment, which proposed to do exactly this, went down in flames. Seventeen Senators who gave their support on to this letter a little over a week ago didn’t show their support when it mattered — during the vote. These Senators were:

After Republicans repeatedly painted their efforts to cut programs for low- and middle-income Americans on the floor of the House early this morning as necessary in order to bring down huge deficits (in fact, the bill was actually named "The Deficit Reduction Act of 2005"), those very same Republicans are turning around in less than 24 hours to consider more tax cuts for rich Americans that would actually increase the very same deficits they so reviled just a few hours earlier. This action is the ultimate hypocracy.

When Representatives have the audacity to cut health care, food and nutrition, child welfare, and education funding that ends up paying for more tax cuts for the wealthy in the same day, it's no wonder Americans have no faith in Congress.

Read more about the radical House agenda to take from the poor and give to the rich.

Posted by Adam Hughes, 09:32:31 AM



15 Democrats and 51 Republicans Cast Irresponsible Tax Vote

Late tonight, the Senate approved a $60 billion tax cut bill, by a vote of 64 - 33. Fifteen Democrats supported the final bill after mostly Republicans majorities defeated 17 different amendments.

For those Democrats who supported the tax bill, particularly Sens. Maria Cantwell (WA), Hilary Clinton (NY), Charles Schumer (NY), and Debbie Stabenow (MI), it will now be difficult, if not hypocritical, to say to their constituents how deplorable it is that Republicans are using budget cuts for the poor to pay for tax cuts for the rich. This will not be difficult because that statement isn't accurate - it certainly is - but rather because those Senators have now lent their support and opened the door for yet another round of those very same tax cuts. In addition, hopefully it will be the last time those Democrats - or any of the 51 Republicans who supported the tax cut - have the audacity to speak about fiscal responsibility as this bill will increase the already outrageous deficit by $60 billion.

Last week, the Senate Finance Committee could not pass a $60 billion tax cut bill primarily benefiting the wealthy because of opposition from Sen. Olympia Snowe (R-ME) and all Democrats on the committee. On the surface, Committee Chairman Charles Grassley (R-IA) removed the most offense section of the bill, an extension of capital gains and dividend cuts, which nobody denies primarily benefits the wealthy.

But there was something happening behind the scenes. The only way to win the support from conservatives was for Grassley to promise to sneak the capital gains and dividend cuts back into the bill after it left the committee. While that kind of secret handshake assurance between Grassley and conservatives on the committee might be difficult to prove, Sen. Bill Frist (R-TN) and Sen. Jon Kyl (R-AZ), two members of the Finance committee whose votes Grassley needed and both of whom are members of the Senate Republican leadership who will have great influence over this bill during a House-Senate conference, have publicly announced the capital gains and dividend cuts will absolutely be included in the final bill that appears before the Senate. In fact, Frist released a press statement guaranteeing the cuts would be included.

Frist is quite confident the Senate would support those cuts, stating "I believe that a majority of the Senate supports including them in the final package." One must ask then, why not vote on an amendment on the Senate floor to add the tax cuts for the rich to the bill? Why must Senator Frist use his back-room power to sneakily add a new provision to the bill in conference with the House that was not supported in the Finance Committee nor approved on the Senate floor? Why does Senator Frist not allow for a vote on the merits of this particular tax cut for the rich?

Could it be, perhaps, that a majority of Senators would not vote to support the tax cuts for wealthy Americans at a time when there are so many other pressing priorities and when deficits are so high? This is not the open and transparent democratic process the American people deserve, and it is allowing radicals in Congress to ram through awful budget and tax policies that will harm the most vulnerable people in the nation.

Both the House and the Senate are working late tonight, trying to pass budget and tax cut bills that have faced considerable obstacles over the last two weeks.

The Senate is currently voting on a long series of amendments to their version of the tax cut reconciliation bill approved by the Finance Committee yesterday. The House has just moved to consideration of their version of the spending cuts reconciliation bill. Both chambers are likely to be in session past midnight tonight before final votes on each bill.

Tune in here on the Budget Blog for up to date information and updates on the debates and votes on each of the bills.

Sen. Kent Conrad (D-ND) gave an exceptional floor speech this morning on the tax reconciliation bill. His speech highlighted one theme: paying for the tax cuts Or in general, government spending). Whether or not one agrees with cutting taxes, it is especially egregious for members of Congress (and the President) to be pushing through tax cuts and extensions year after year and, rather than propose a way to pay for this spending, simply tack it on to the deficit.

Conrad asked of the tax reconciliation bill, "Why shouldn't we prevent the debt from being deepened?" Revenue, in 2004, was at its lowest point as a share of GDP since 1959, and national debt has gone up over $1 trillion in five years. On top of this, baby boomers will soon be not only retiring in droves, but in need of medical care. As these costs are going up, Republican lawmakers seem unconcerned with pursuing any sort of fiscally responsible legislation. Sen. Conrad offered a substitute amendment to the tax reconciliation bill that was defeated 44-55.

It's been a busy day of voting on tax and budget issues in both the House and the Senate. Below are the highlights thus far:

Continuing Resolution Continued
The House voted 413-16 to extend the current continuing resolution (CR) funding the federal government through December 17. It was due to expire tomorrow. The CR is necessary for the government to be funded while Congress finishes work on the approps bills; however this particular CR egregriously underfunds programs. Read more about it here.

Labor-HHS Approps Bill Fails
The House did not pass the Labor-HHS appropriations bill discussed earlier on this blog. The vote failed 209-224, with all Democrats voting and 22 Republicans against the bill. It will now be sent back to conference, or the bill may be passed in an omnibus bill later this year.

The House Labor-HHS vote is a good sign that GOP moderates are standing up for the right priorities today, instead of voting with the leadership. The House is currently in recess right now because leadership still does not have the votes to pass the budget reconciliation bill. This bill has already been postponed once last week because of lack of support. The GOP is holding off and twisting arms until they can get the votes they need. According to the leadership they are still planning to hold the vote today, but that could change at any time.

Senators Decide They Like Deficits
On the other side of the Capitol today, Sen. Conrad's (D-ND) substitute amendment to the tax reconciliation bill was defeated. The Senate voted 44-55 against the amendment which would have extended only tax cuts that expire in 2005, expanded a one-year provision to decrease the effect of the alternative minimum tax on the middle class, and provided tax incentives for Gulf Coast rebuilding. Conrad's amendment would have also included offsets for these tax cuts so they would not increase the deficit. Unfortunately, Senators, including two Democrats, voted against fiscal responsibility when they voted against the Conrad substitute.

Both the House and Senate will be holding important votes today on reconciliation bills. The House Rules Committee met this morning at 7 AM and decided to bring the budget reconciliation measure to the floor today. It is still unclear whether the leadership has the votes to pass the $54 billion bill. This vote is extremely important, and lies in the hands of Republican moderates. Rep. Mike Pence (R-IN), chairman of the radically conservative Republican Study Committee, himself said that the "Republican revolution is over," if the House does not pass this reconciliation measure.

The Senate is also planning to vote today, however they will be voting on the tax reconciliation bill. After having been stalled in committee for about a week, Finance committee members agreed to a $60 billion bill that does not include rate extensions for capital gains or divendends. While this is good news, in the short term, we can assume that eventually this provision will be stuck back in during conference negotiations.

Although we do have Sen. Olympia Snowe (R-ME) to thank for successfully pressuring Finance Committee Chair Grassley (R-IA) to remove the cap gains and dividends extensions from the reconciliation tax bill, it appears this victory could be very short-lived.

Senate conservatives have agreed not to press the issue during floor debate, so that it will move into conference talks with the House (the Senate is voting on the reconciliation tax bill today). But Majority Leader Bill Frist (R-TN) said yesterday he will push for the dividend and capital gains provisions to be re-inserted into the bill during negotiations, which pretty much makes Sen. Snowe's heroic holdout somewhat moot. Frist said the issue is "too important to our economy to be left on the cutting-room floor, and I will not bring a conference report to the Senate floor that does not include this extension."

Finance Committee Democrats Baucus, Lincoln, and Schumer should not have voted for that bill in committee both because the contentious tax rate provision will likely be reinserted, and because the $60 bllion in tax cuts is not offset (and therefore, will irresponsibly add to the deficit). Despite Snowe's effort on the issue, Frist will certainly make sure the extensions are in the final bill, and Senators opposed to those extensions would be wise to keep that in mind while voting.

Senate Finance Committee members passed the tax reconciliation bill out of committee yesterday, after stalling for a number of days due to Sen. Olympia Snowe's (R-ME) opposition to the provision extending low tax rates for capital gains and dividends. The $60 billion measure which passed does not include the extensions, which were put in place in 2003 and scheduled to expire in 2008.

This is a legislative setback for President Bush, who has repeatedly called on Congress to make his expensive, deficit-financed tax cuts permanent. Three Democrats ended up voting for the measure, which was not offset in any way. They were ranking member Max Baucus, (D-MT), Charles Schumer (D-NY) and Blanche Lincoln (D-AR). The bill will now go to the Senate floor, perhaps as early as today.

The Senate version differs greatly from the reconciliation bill passed by the House Ways and Means Committee late last night. The House bill extends low capital gains and dividends rates through 2010, along with a tax cut on the overseas income of U.S. banks, and a handful of other business extenders. It does not include a one-year fix for the alternative minimum tax, which the Senate bill contains. It remains to be seen what will come out of conference, but there will definitely be sparring over what to include. Sens. Jon Kyl (R-AZ) and Mike Crapo (R-ID) have said, for instance, that they will work to restore the capital gains and dividend extension in conference.

Washington Post: Senate Panel Does Not Extend Tax Rate Cut

As of late, American voters seem more concerned with having revenue to invest in national priorities than in giving it away in the form of costly and regressive tax cuts. In recent elections, voters in California, Colorado, and Washington state rejected ballot measures that would have rolled back tax increases or limited state spending. Many believe that after September 11 and the Gulf Coast hurricanes, more Americans are starting to see the value of a strong government infrastructure which can adequately respond to public needs by providing safety and various other services.

In the same vein, it is growing increasingly clear to many that the irresponsible and expensive tax cuts of 2001 and 2003 are not boosting economic performance, nor are they paying off well. As Allan Sloan mentions in a column in today's Washington Post, "Bush and the rest of the it's-always-a-good-day-to-cut-taxes crew are having trouble getting Congress to approve $70 billion of tax cuts (over five years) as part of the budget reconciliation process. These cuts would go primarily to upper-middle-income and rich taxpayers, while $35 billion of proposed cuts in benefits for food stamps, Medicaid and the like would affect mostly lower-income people. Some members of the House and Senate now seem to have realized how distasteful this combination is. As well they should."

As Sloan goes on to mention, "Fallout from phony numbers [used to justify the tax cuts] and having to pay for Hurricane Katrina have stalled Washington's cut-taxes-and-borrow crew, at least temporarily." This is especially apparent on capital hill, where a number of Republicans are stepping in and saying "enough is enough." George Voinovich (R-OH) has already made it clear he is opposed to the $70 billion in tax cuts Congress is trying to pass in reconciliation, Olympia Snowe (R-ME) is opposed to the extension of capital gains and dividends extensions and is currently responsible for the gridlock in the Finance Committe, and a handful of House members such as Sherwood Boehlert have spoken out against excessive spending cuts.

OMB Watch has published an op-ed, "The Ultimate Special Interest," in today's issue of tompaine.com. The op-ed delves into the details behind today's House vote on the budget reconciliation measure. The bill not only includes "draconian cuts" to human needs services, but when taken with the reconciliation tax bill it actually raises the deficit, completely defeating the GOP's argument that the bill is needed in order to combat massive spending.

The Finance Committee has postponed their markup of the $69 billion tax cut bill, originally scheduled to take place at 10:00 this morning. The markup was postponed because Grassley did not have the support of Republican Olympia Snowe (R-ME), who is opposed to the extension of low tax rates for capital gains and dividends. Apparently committee-only negotiations are taking place to possibly remove the $11 billion, one-year extension to placate Snowe, however this move raises the ire of a number of panel Republicans, especially Sens. Lott (R-MS) and Kyl (R-AZ).

CNN.com: Republican Tax Cuts Hit Snag

Late last night House GOP leaders removed language from the budget reconciliation bill on both drilling in Alaska's Arctic National Wildlife Refuge and allowing for offshore oil drilling. Both provisions were widely opposed by House GOP moderates, and the move was made in an effort to pick up votes for the bill, which cuts mandatory spending by $54 billion over the next five years. The provisions were stripped after pressure from the moderates, twenty-six of whom sent a letter to the leadership November 8, arguing their position.

Even though ANWR and offshore drilling were removed from the bill, the future is uncertain. A number of Republican House members oppose other contentious provisions in the bill, such as the proposed Medicaid cuts or the repeal of the Byrd amendment. And the House may also run into trouble with the Senate on ANWR matters in conference. A number of Republican senators, such as Ted Stevens and Lisa Murkowski of Alaska and Pete Domenici of New Mexico have noted that ANWR drilling is by far the most important provision in the bill, and thus leaving it out of the House bill sets up a potential battle with the Senate.

The Rules Committee also made an exceedingly slight change to the food stamp immigrant provision, which is being dubbed a "fix." In reality it is anything but this. The House budget bill still contains large and damaging food stamp cuts. Tens of thousands of children will lose free school meals, and much of the cost will shift to states, adding administrative complexity and client confusion. The minor exemptions added by Rules do little to ameliorate the harsh impact that CBO originally estimated for the House Agriculture Committee immigrant cuts ($275 million over five years, cutting 70,000 legal immigrants in an average month).

Rep. Boehlert is one member of the House who has the right idea about the budget reconciliation bill -- he opposes the bill because of the ANWR language and because it shows a "disconnect" by trimming spending on low-income programs, only to set the stage for tax cuts for the wealthy.

Boehlert, apparently, had tbis to say to Speaker of the House Dennis Hastert (R-IL): "I told [him] I'm against euthanasia and I'm against human cloning." "He said, 'What do you mean?' I told him I'm against euthanasia because this could mean the orderly demise of our Republican majority. And I'm against human cloning because you're trying to recreate [our party] in the image of one sector" of the party. Many moderate Republicans are standing up against the extreme conservatives in their party who are trying to push contentious and harmful budget cuts in the reconciliation bill. Let's hope that their votes add up tomorrow.

Grassley's $68.8 billion tax package will face tough opposition in the Senate Finance Committee, and there is a chance the measure will be stalled in committee due to the opposition of Sen. Olympia Snowe (R-ME). Snowe specifically objects to the extension of the tax cut in dividends, and views the inclusion, along with other Democrats, as unnecessary.

If Snowe votes with the Democrats, the measure will stall in committee. Ranking member Max Baucus (D-MT) said he doubts Grassley has the votes to approve the package.

New York Times: Tax Proposal By G.O.P. Would cut $70 Billion (11.9.2005)

Today the Finance Committee released the Description of the Chairman's Mark of the "Tax Relief Act of 2005," which is scheduled for markup November 10. The proposal outlines nearly $7 billion in tax benefits for businesses and individuals in areas affected by Hurricanes Katrina, Rita, and Wilma.

The $7 billion in tax cuts is part of the larger, $69 billion reconciliation tax package that Chairman Grassley is hoping will be passed in the next two weeks. The reconciliation tax bill also:

The entire tax package is approximately $8.6 billion above the $60.2 billion limit on the amount of tax cuts protected from filibuster under budget reconciliation rules. According to CongressDaily, however, Grassley reiterated today at the U.S. Chamber of Commerce that he believes the Senate would defeat a point of order against the reconciliation bill as long as its cost is not more than $60 billion above the amount of hurricane relief.

John Irons, Director of Tax and Budget Policy at the Center for American Progress has released the following statement on "first impressions" of the President's Tax Reform Panel recommendations to the Treasure Department.

Overall, Irons shares the concerns of many other experts in that the recommendations of the panel, while a good starting point, run the risk of being "cherry-picked for those components that fit this administration’s narrow, ideological goals; and the hard choices that the commission had to make to achieve revenue and distribution neutrality may simply be ignored."

E.J. Dionne Jr. has written a scathing op-ed blasting lawmakers - particularly in the House - for "proclaim[ing] their desire to encourage hard work, personal responsibility and family values," but then going against these stated principles by "pushing a budget that... is a direct assault on ... hard work, personal responsibility and family values."

As Dionne points out, the cuts proposed by House Republican leaders would hurt programs that provide food stamps, child care assistance, child support enforcement, foster care, and Medicaid. So many politicians are quoted in the media discussing the "hard choices" they have to make to cut the deficit. But in reality, these reconciliation bills don't do anything to cut the deficit because they also cut taxes. As Dionne says, "A hard choice for them would be to cut tax pork, that dizzying list of "tax incentives" they have showered on oil companies and investors, and to halt the repeal of the inheritance tax on large fortunes."

The lawmakers working on the budget as we speak cannot call themselves fiscally responsible until they make some real hard choices -- that is, ending the flow of tax breaks for the wealthy that are pushing this country deep into debt and giving Republicans a cover to cut both entitlement and discretionary spending. Anything less than ending the onslaught of tax cuts (federal spending in disguise) is simply a front at fiscal responsibility.

The op-ed, House Mollycoddles The Rich, appeared in today's Sacramento Bee.

It appears House Ways and Means Committee Chairman Bill Thomas (R-CA) may not include a temporary alternative minimum tax (AMT) patch this year to protect 14 million people from paying the tax. An AMT one-year fix will not fit in the reconciliation package along with an extension of capital gains and dividends, which has a cost of roughly $21 billion over two years. An AMT fix, on the other hand, would cost about $30 billion.

Thomas' wavering comes as moderate Republicans are voicing their concerns on passing both tax cuts and spending cuts in the same reconciliation package. Moderates have pushed Thomas to scale back the tax bill, which has generally been assumed to total $70 billion over five years. There is a chance an AMT fix could pass outside of reconciliation, however, Thomas noted that he may wait until next year's debate on comprehensive tax overhaul to address that issue. "Would it make sense to soften the blow right before you're trying to look at a change in structure to deal with that very issue, or might it not help the momentum on tax reform if a few more people fully understood the impacts of AMT?" he said.

Associated Press: House's Top Tax Writer Weighing Charges

Posted by Becky Lewis, 11:53:04 AM

Wednesday, November 02, 2005

Tuesday, November 01, 2005