Federal Budget & Tax

Federal Budget & Tax: News Blog Background

Friday, February 25, 2005

An editorial in this week's edition of Business Week came out in favor of a fair and responsible estate tax as a means to generate needed national revenue. The editorial said this:

"An estate tax that protects families, small farmers,and businesses can still generate tens of billions of dollars in revenues. Letting lapse the income tax cut of the highest income bracket could also generate billions of dollars of tax revenue that could pay for the teachers and emergency responders who will lose their jobs under budget proposals to reduce federal aid to cities. The budget also calls for cuts in Food & Drug Administration inspections of imported food and medicine -- right after a British plant supply half the flu vaccine to the U. S. was closed due to contamination."

Posted by Becky Lewis, 06:27:12 PM

Reconciliation Measures

Today's CongressDaily News Service reports that GOP Congressional leaders are discussing whether to move separate reconciliation bills for entitlement spending cuts and tax cuts in the reconciliation process. They are also discussing the possibility of potentially moving a third reconciliation measure to increase the debt limit, currently set at $8.2 trillion. The debt limit was increased last November. CongressDaily reports:

"These are the clearest signs yet that GOP leaders are serious about trimming entitlements for the first time since the 1997 balanced budget agreement. Reconciliation offers procedural protections for revenue and mandatory spending bills after successful adoption of the annual budget resolution. By de-linking legislation mandating savings in entitlement programs from a package of tax cut extensions, sources said, Republican leaders would seek to avoid unfavorable comparisons already being voiced by Democrats. "They would be concerned if tax cuts and cuts in critical services are in the same bill because people might think spending cuts for programs like Medicaid are being used to fund tax cuts," said Thomas Kahn, Democratic staff director for the House Budget Committee."

This would indeed be the case if both entitlement spending and tax cuts were passed in the reconciliation process. As the Center on Budget and Policy Priorities reports, Bush's tax policies since 2001 account for 48% of our deficit, yet it is the spending on entitlement programs, such as medicaid and medicare, that are going to suffer from budget cuts in the name of fiscal responsibility. Keep checking the budgetblog for updates on the the reconciliation process as well as Congress' budget resolution.

Posted by Becky Lewis, 03:50:20 PM

Wednesday, February 23, 2005

Chapter on Iraq Excluded from Economic Report
It was reported in the Washington Post this morning that the Bush administration purposely excluded a completed chapter on Iraq's economy from its Economic Report of the President, which was released a few days ago. The National Security Council requested the chapter be removed, reasoning not that there was sensitive data that could lead to increased security concerns, but that the "feel-good" tone of the chapter would make the administration look bad amid continuing violence.

This is an extreme and unprecedented decision by the Bush administration. The Council of Economic Advisors (CEA), who produces the report, is supposed to be an independent entity and its members have long prided themselves on their academic integrity.

While there have been disagreements between White House staff and members of the council over past reports, the deletion of an entire completed chapter was described by former CEA members as "extraordinary," and "extreme."

This decision paints a broader picture of the Bush administration and the CEA with respect to policy analyses. Former CEA member under President Reagan William Niskanen said this showed that the council had been significantly weakened. Others observers are afraid this is just one more example of an administration that does not value lengthy, reasoned analyses of its policies. A former policy advisor to Presidents Reagan and Bush I, Bruce Bartlett commented, "They just don't seem to show that serious study is an important part of politics. [The current Bush administration] takes a very casual, hands-off, almost lackadaisical approach to the policy process."

Posted by Adam Hughes, 11:41:13 AM

Tuesday, February 22, 2005

Options for Tax Reform

Last week the administration released the 2005 Economic Report of the President. The report includes - among other details - a chapter on options for tax reform, which the President has expressed interest in looking into during his second term. To look into tax reform options, Bush has put together an advisory panel on federal tax reform; you can see a list of the members of that panel here. Members of the panel met for the first time last wednesday to discuss how they can go about reforming the tax code to make it simpler, fairer, and more pro-growth to benefit all Americans. The panel will submit their recommendations to Treasury Secretary John Snow in July.

Today's BNA news services reports that the Chairman of the panel, former Senator Connie Mack (R-FL), is calling for public comments to be made on problems faced by both individuals and businesses under current tax laws. Comments are requested by March 18th. See this page for more information on how you can submit comments to the panel.

Posted by Becky Lewis, 12:45:24 PM

Asking the Right Questions

Read this editorial in today's Washington Post for a quick and straightforward discussion of why President Bush's two additional tax cut proposals (that haven't taken effect yet) are unnecessary. These two tax cuts, which begin to phase in next year unless Congress acts, would go to the 4 percent of U.S. households with annual incomes of over $200,000, and would reduce government revenue by over $200 billion.

The column asks the right question: given the growing record deficits and uknown future costs of war endeavors, "Why does President Bush think this tax break is necessary?"

Posted by Becky Lewis, 09:50:20 AM

Wednesday, February 16, 2005

Bush To Consider Raising SS Income Cap
As reported in the Washington Post this morning by Dan Froomkin, President Bush has said for the first time he would consider raising the cap on income subject to payroll taxes.

The president has previously stated firm opposition to raising the tax rate but has remained silent on the cap on social security payroll taxes, currently set at $90,000. The president's announcement opens the door to the possibility of dramatically increasing Social Security revenues. Estimates by Social Security actuaries show by lifting the cap completely, it may be possible to close the entire funding gap in the program over the next 75 years.

Posted by Adam Hughes, 05:20:27 PM

New OMB Watch Report on FY06 Budget
OMB Watch has recently released this new report on the FY06 Budget from the nonprofit perspective. The report outlines some of the misleading aspects of the president's budget and details the more egregious proposals and cuts to programs.

Bush FY06 Budget Impact from the Nonprofit Perspective (.pdf)

Monday, February 14, 2005

Senate Republicans Voice Concerns Over Budget

As Senate Budget Committee chairman Judd Gregg (R-NH) noted publicly last week, the release of the President's austere budget not only has Democrats up in arms, but also is creating "some significant angst among my colleagues" on the other side of the aisle. Senator Voinovich (R-OH) in particular has come out against the fiscal irresponsibility of Bush's economic agenda, announcing last week that he will oppose efforts to make the 2001 and 2003 tax cuts permanent. Voinovich said he will vote against the President's budget if necessary, and cited having possible support among other Republican colleagues of his in the so-called "Centrist Coalition," including Senators Collins (R-ME), Snowe (R-ME), and Bennett R-UT). See this Toledo Blade article for additional information.

In related news, an article in today's Washington Post reports other lawmakers, including Senator McCain (R-AZ), have been raising concerns regarding the long term costs of some of Bush's fiscal policies. The article hints that people eyeing the White House in 2008 have reason to be worried since budget costs are expected to drastically increase in the coming years.

Posted by Becky Lewis, 12:03:52 PM

Wednesday, February 02, 2005

Center For American Progress Unveils Progressive Tax Plan

The Center for American Progress has launched a progressive priorities project aimed at providing a positive vision for progressive lawmakers that is supported by a series of innovative policy ideas. The Center is authoring approximately a dozen reports over roughly a two month period that include broad policy recommendations as well as specific steps lawmakers can take in order to achieve these policy goals.

On Monday the Center released one paper in this series about tax reform, called "A Fair and Simple Tax System for our Future: A Progressive Approach." The paper outlines policy necessary to restore a fair, simple, and pro-opportunity tax system, and serves as a responsible and progressive alternative to the tax policies currently embraced by the Bush administration.

Posted by Becky Lewis, 06:18:06 PM

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