During a prayer vigil for "moral budget" today in the Capitol Rotunda, 114 people were arrested. The vigil was led by evangelist Jim Wallis of Call to Renewal, and it was one of approximately 63 prayer vigils taking place across the country today. Participants were acting in response to Congressional votes on the budget and tax reconciliation bills.

The bills, which slash funding for social programs and give tax breaks to the wealthy, have been the point of much contention over the past few months. Congress is currently trying to reach final conference negotiations on the bills, however it is still unknown whether they will be able to do so this late in the year. Many GOP leaders have hinted that completing the negotiations will be difficult, including Senate Budget Committee Chairman Judd Gregg (R-NH), who recently said, "I don't sense that we can restructure this thing at this late date."

Washington Post: More Than 100 Arrested in Capitol Protest

TIME Magazine reporter Mike Allen writes in this week's edition that any significant tax reform attempts are likely to be postponed until at least 2007. Allen says:

Bush aides tell TIME that the President is likely to postpone any big push for comprehensive tax reform--which looked like it would be a centerpiece of next year's agenda--until '07 or '08. In the meantime, he will probably start small by mentioning the issue in the State of the Union and other addresses next year.

With his Social Security overhaul proposals thoroughly defeated and tax reform postponed, Bush's two main policy objectives for his second term seem to have one foot in the grave. If Republicans in Congress keep in lock-step however, he should be able to pass a few more tax cuts or the wealthy before his time in the White House is done.

TIME Magazine: Tax Reform: A Balk?

Posted by Adam Hughes, 11:30:51 AM



Deficit Up Sharply In November

This November the Treasury recorded a n $83.1 billion deficit. The significant increase is partially due to hurricane payouts, as government spending is far exceeding tax receipts. The total deficit for the first two months of this fiscal year - which began October 1 - was $130.3 billion, or 13.1 percent higher than it was during the same period last year (when the Treasury reported a $115.2 billion deficit). Revenues for the month totaled $138.8 billion while spending was up to $221.9 billion.

Today the House pushed through a $56 billion tax reconciliation bill, culminating what has been a month of illogical and hypocritical voting. This $56 billion tax reconciliation bill comes on the heels of a nearly $50 billion budget reconciliation bill, which ruthlessly slashed spending on everything from the food stamp program to Medicaid. It is no wonder Rep. David Obey (D-WI) said that House actions "makes Mr. Scrooge look like Mother Teresa." The bill passed 234-197; three Republicans voted against the bill and nine Democrats voted for it. Those Democrats were Reps. Barrow (GA), Bean (IL), Boren (OK), Cramer (AL), Cuellar (TX), Davis (TN), Gordon (TN), Marshall (GA), and McIntyre (NC).

The centerpiece of this bill extends through 2010 the Bush tax cut (enacted in 2003) that significantly lowered rates for five years on dividends and capital gains. These provisions, according to the Joint Committee on Taxation, will cost the Treasury $20.6 billion through 2010. $20 billion is a lot of money considering that GOP Congressmen spent much of the last four months publicly yelling that discrentionary spending must be cut in order to deal with hurricane relief spending, which we could not afford to do without budget offsets.

As Robert Reich, former Secretary of Labor under President Clinton, points out in this article, Class Warfare With Taxes, the House's actions speak volumes on where its members' loyalties lie, prefering to cut taxes on capital gains while the Senate cut taxes by extending AMT relief. Reich writes:

Most of benefits of the House’s proposed extension of the dividend and capital gains tax cuts would go to the top one percent of taxpayers, with average annual incomes of more than $1 million. Most of the benefits of the Senate’s cut in the AMT would go to households earning between $75,000 and $100,000 a year, who would otherwise get slammed.

Reich goes on to point out that most likely, both capital gains and dividends tax cuts as well as an extension of AMT relief will end up coming out of final bill negotiations. He calls this skilled political manuever an "elegant compromise" by Congress which will likely end up passing both measures while exploding the deficit.

However, while Congress takes care of the upper-middle class and the wealthy, they have done nothing but maliciously cut aid for the poor. They have particularly left behind those struggling to rebuild their lives along the Gulf Coast by offensivley using the reconciliation process to cut tens of billions of dollars from social programs mere months after the face of poverty was thrust into the national spotlight in the wake of the hurricanes. Congress and particularly those nine Democrats should be ashamed of themselves. There is a disconnect when billions of tax cuts to the wealthy are used to "grow the economy" to indirectly help people in need, but proven proactive programs that directly help people are slashed because of deficits. National budget deficits do need to be dealt with, but not by cutting the budget one day and then pushing through massive tax giveaways the next. That is simply counterproductive and illiogical.

Posted by Becky Lewis, 04:45:19 PM



House Passes Major Tax Measures Yesterday

The House passed a number of tax bills yesterday. In total, they voted to trim $94.5 billion from federal revenue over five years. As Concord Coalition executive director Robert Bixby aptly put it in this Washington Post article, "I don't think it makes any sense to go through all the difficulty they just went through with the budget-cutting bill, then give it all back in tax cuts. If they want to cut taxes, fine, but they are going to have to cut spending by at least that much to help the deficit, and clearly they are not willing to do that. They have to start looking reality in the face."

H.R. 4096 passed by a vote of 414-4, and attempts to slow the expansion of the alternative minimum tax (AMT). It does this by extending the AMT exemption for one more year (adjusted for inflation). The bill costs $31.2 billion.

The second tax bill, H.R. 4440, passed the House by a similarly large margin with a vote of 415-4. The bill, which will cost $7.1 billion over five years, will provide tax breaks for businesses in the "Gulf Opportunity Zone." Thanks to the work of Frank Wolf (R-VA) and other House members, GOP leaders exempted casinos, country clubs, hot tub facilities, liquor stores, massage parlors, golf courses, racetracks and tanning salons from the tax breaks.

The final tax bill passed, H.R. 4388, will extend a provision allowing members of the military to use their combat pay to claim their earned income credit. The bill will cost $153 million.

The tax bills passed with broad bipartisan support and little mention of how the deficit will be impacted. The budget deficit is projected to reach $331 billion in FY '06 and remain above $300 billion a year through 2010, when most of Bush's tax cuts are set to expire. If the tax cuts are extended, these projected deficits will skyrocket above that figure.

CNN.com: House GOP Continues Tax Cutting Push

Rep. Frank Wolf (R-VA) has pursuaded the House GOP leadership to put forward a Hurricane Katrina tax bill that exempts some businesses in the Gulf Coast from receiving tax breaks. According to a Ways and Means Committee summary of the bill, the "Gulf Opportunity Zone" restoration tax incentives will not be extended to country clubs, liquor stores, massage parlors, private or commercial golf courses, racetracks, tanning salons, or "facilities used for gambling."

Wolf and 35 others have said they will oppose a conference agreement that puts tax breaks for those businesses back in. The fear is that the tax reconciliation bill and the Katrina tax relief bill will be combined in conference, which would put these dissenting Republicans in a significantly more precarious political position if they decided to vote their consciences.

Not surprisingly, the revised House bill has drawn criticism from both the White House and prominent Republican Senators. White House Press Secretary Scott McClellan said that administration officials "don't believe you can be selective when it comes to addressing the economic needs of the region. It should apply equally and fairly to all those businesses." Trent Lott (R-MS) said in a statement yesterday, "To reject legitimate businesses from providing good jobs to a state’s disaster victims would set a serious precedent in disaster relief funding. I cannot recall the Congress ever discriminating against legal businesses in the dissemination of disaster relief — not against gaming establishments, not against businesses which sell tobacco products." Business discrimination or not, it would have been nice to see Lott display a scintilla of this same outrage over Congressional actions to cut funding from social service programs after citizens in his region suffered in the wake of the worst natural disaster seen in recent American history.