It's getting increasingly hard to sort out fact, fiction, and fantasy when it comes to Bush and the budget. Back in February, Mr. Bush proposed a five-year spending plan that projected a balanced budget by the year 2012. One of the key assumptions in the plan was that the AMT would go unpatched by Congress and continue to produce ever-increasing tax revenues -- a fiscal future fantasy. Without those revenues, the Bush budget would never be balanced.

Of course, everyone knew Congress would patch the AMT. Bush's projected revenue stream could nevertheless continue -- but only if the patch were paid for.

OK, now fast-forward from February to this afternoon, when the White House issued a veto threat against a paid-for patch that protects the revenue stream the Bush budget depends on to reach balance by 2012, saying that "the Administration is extremely disappointed that the House of Representatives continues to demand large tax increases as the price for protecting 25 million taxpayers from an unintended, unexpected, and unwelcome tax increase averaging $2,000."

"Unintended, unexpected, and unwelcome"? Is this now how Bush views his own 2012 balanced-budget plan?

Tax Cuts Don't Boost Revenues

If there's one thing that Republican politicians agree on, it's that slashing taxes brings the government more money....If there's one thing that economists agree on, it's that these claims are false. We're not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves--and were never intended to. Harvard professor Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues.

In addition to the report I wrote about earlier, the CBO has made the data underlying that report available in an Excel spreadsheet.

Like Republicans and tax cuts, I just can't resist graphing income and tax data. So, here you go. This graph represents the shares of after-tax income for the lowest 4 quintiles and the top quintile. I knew the 2001-2003 Bush tax cuts were skewed toward the rich, but this graph really puts things into perspective.

(Click on image to enlarge)

Far from getting the necessary 60 votes, the effort to pass H.R. 3996, the Temporary Tax Relief Act of 2007 -- a.k.a., the House-passed AMT patch bill -- a PAYGO-compliant, one-year patch accompanied by a provision to close the carried interest loophole and other offsets, was defeated by a vote of 46-48 in the Senate this morning.

The Senate will solider forward in its effort to pass an AMT patch, no doubt. Allowing the AMT to go unpatched by year's end and 20 million new taxpayers to have to pay it is politically unimaginable, but as today's vote shows, the Senate would rather not pay the roughly $50 billion price of the patch -- even at the expense of the PAYGO principles.

I wonder how subtle the Senate will be in waiving those principles formally. Oh, say can you see a U.C.?

The Senate is considering an energy bill with a tax component that would repeal some $13 billion in tax breaks for five of the biggest oil companies, ostensibly as incentives for oil and gas production. Bush has threatened a veto and some Senators are bemoaning cuts in corporate welfare. (And at $100 per barrel, I hardly think Big Oil needs any more incentive to find as much oil as possible on American soil.)

The president and his Senatorial enablers talk a big game about "fiscal responsibility" and the evils of earmarks, but when it comes to tax expenditures it's a whole other story.

Image by Flickr user Skrewtape used under a Creative Commons license

BNA reports that Senate Majority Leader Harry Reid (D-NV) filed cloture today on a motion to proceed to the House-passed, PAYGO-compliant, AMT patch/tax extenders bill. The move sets up a Senate vote as early as Thurs., Dec. 6.

Reid apparently tried and failed to reach agreement with the Senate Republican leadership to hold votes on three versions of the AMT patch and the tax extenders package without amendment, but the GOP continued to insist on floor time for amendments related to extending the 2001 and 2003 Bush tax cuts.

Senate Minority Leader Mitch McConnell (R-Ky.) objects to offsetting any portion of the legislation, saying that by patching the AMT and extending the extenders Congress would be "maintaining the status quo on tax policy" and lawmakers should not permanently raise taxes on some to pay for those policies.

What was that? Maintaining the status quo on tax policy? He doesn't mean extending certain 2001 and 2003 tax cuts, does he?

McConnell's concerns are misplaced; that's not going to happen. As Senate Finance Committee Chair Max Baucus (D-MT) said last week: "[Extending t]he Bush tax cuts will not pass this Congress. There's just no way in the world. They're not going to get 60 votes [in the Senate]."

Or is he suggesting that we change course by letting the AMT go unpatched and the popular package of tax credits and deductions go unextended? That won't happen either.

So just what is this awful "status quo on tax policy" that McConnell wants to do away with? Does he mean PAYGO?

In an attempt to have people pay attention to the issue of the national debt, a recent Associated Press article lead with the eye-catching headline of "National Debt Grows $1 Million a Minute." Wow! $1,000,000.00 a minute! That's quite a bit of cash.