The Center on Budget and Policy Priorities has updated their analysis of the proposed expansion of the Child Tax Credit (CTC) that is currently being debated in Congress. The CTC expansion is included as part of the "tax extenders" package of tax cuts that is scheduled to be debated this week. Looks like the expansion would help some pretty hard working folks:

A proposed Child Tax Credit expansion before the House and Senate would benefit 13 million children - 2.9 million who would become newly eligible for the benefit and 10.1 million who would see their credit increased due to this provision, according to the Tax Policy Center. These 13 million children come from families with parents who work in such jobs as nursing home aides, cook, pre-school teachers, and construction workers.

The CBPP analysis has great breakouts by state of the number of children who would be newly eligible for the credit as well as children who would receive a larger credit.

CHILD TAX CREDIT EXPANSION BEFORE CONGRESS WOULD HELP 13 MILLION CHILDREN:

As Wall Street collapses under the weight of its greed, bad luck, and basic stupidity, the Free Market^TM crusaders of the Bush White House have come out of the pro-regulation, big-government closet. This morning, Treasury Secretary Henry Paulson said that the federal government will ride to the rescue of the investors in distress. And everyone seems to agree: Wall Street must be given a handout hand up.

Matthew Yglesias notices the asymmetry of concern:

It'd be absurd for the government to be moving hundreds of billions of dollars around amidst an economic crisis while doing nothing for, say, janitors who get laid off from Lehman Brothers. The problems to worry about here are in the "real" economy. Propping up the financial sector can help accomplish that, but we also need to prop up normal people trying to pay the bills and weather the storm.

And Isaiah J. Poole at Campaign for America's Future reminds us that providing aid to working or out-of-work families benefits more than just those families.

This stimulus effort was resisted by the White House and by congressional conservatives, one of whom—House Minority Whip Roy Blunt, R-Mo.—groused that "bailing out the states on their Medicaid problems or providing $25 billion worth of infrastructure spending are not stimulative and everyone knows that."

"Everyone knows that?" No. What "everyone knows" is that when ordinary people have good jobs—whether they are created by private investment or public investment—they are able to buy the houses, cars and other goods and services that help keep the economy afloat. In particular, a program of spending public dollars on a range of job-producing activities—from fixing roads and bridges to "greening" our public buildings with renewable energy and conservation—would go a long way toward stabilizing the faltering middle class of this country. What "everyone knows," or ought to realize, is that doing nothing to interrupt the falling dominoes of spending cutbacks at the federal, state and local levels is a recipe for continued economic erosion.

Image by Flickr user oblivion9999 used under a Creative Commons license

If anything, the meltdown on Wall Street has shown that executive compensation and performance are hardly related. After spending the past year further running their firm into the ground and onto the auction block, Merrill Lynch CEO John Thain and two of its executives could walk away with almost $200 million in compensation as they exit the building. Thain's predecessor, Stan O'Neal who started Merrill Lynch on the road to serfdom took his personal belongings from his office and $160 million when left the firm. Richard Fuld, who steered Lehman Brothers into bankruptcy this week will see a $22 million retirement package.

Defenders of obscene executive pay have told us time and time again that that all that money is necessary attract the top talent necessary to run these massive corporations. But never mind all that, the Free Market_TM crusaders of the Bush White House have come out of the pro-regulation, big-government closet with a plan to rescue Wall Street from itself. And with the bailout, economist Dean Baker sees an opportunity.

While we don't want a chain reaction of banking collapses on Wall Street, the public should get something in exchange for Bernanke's generosity. Specifically, he can demand a cap on executive compensation (all compensation) of $2 million a year, in exchange for getting bailed out. For any bank that is not on board, Bernanke could make an explicit promise to their creditors — if the bank goes under, you will get zero from the Fed.

[...]

The explosion of the financial sector over the last three decades has led to a proliferation of complex financial instruments, many of which are not even understood by the companies who sell them, as we have painfully discovered.

The best way to bring the sector into line is with a modest financial transactions tax. Such taxes have long existed in other countries. For example, the United Kingdom charges a tax of 0.25 percent on the purchase or sale of share of stock. This is not a big deal to someone who holds their shares for ten years, but it could be a considerable cost for the folks who buy stocks in the morning that they sell in the afternoon.

These are certainly interesting ideas that could prove useful in putting Wall Street to work for Main Street instead of enriching just the investor class. While these specific ideas may have their own problems, Baker is making a very important point: we should use this opportunity to bring Wall Street back into the social contract of economic and social institutions working hand-in-hand.

Image by Flickr user Bobcatnorth used under a Creative Commons license

We'll be shutting down the BudgetBrigade a bit early today to head off to OMB Watch's 25th Anniversary celebration. Yup, that's right. OMBW is 25 years young this year and we're primed and ready for our quarter life crisis! We're taking some time to celebrate tonight with friends and supporters and remember 25 years of fighting for a more transparent and accountable federal government.

While we are looking back over some of our accomplishments of the last quarter century (and honoring the unsung work of some of our public sector colleagues), we are also looking forward to the challenges we'll face over the next 25 years and beyond.

You will be a key part of overcoming those future challenges, just as you've been crucial to our past accomplishments. Your involvement, along with hundreds of thousands of people just like you has helped to make us the success we are today. So thank you for your commitment to the open and accountable ideals that have helped guide OMBW over the past 25 years.

And if you want to help make sure those ideals continue to be realized, consider making a small donation to OMB Watch in honor of our 25th birthday. Your contribution will join with hundreds of others who want to ensure we are able to continue our mission and the important work we do everyday.

Via TaxProf Blog, we read a commentary in TaxAnalysts by tax guru David Cay Johnston pointing out a few facts the revenue haters would prefer be kept under wraps.

In this country of 9 million people, there are as many as 1.3 million pleasure boats, meaning that on their own or through extended family, the vast majority of citizens have access to the water by motor or sail. That is a boat ownership rate at least twice that of the United States...

How can this be? According to American political dogma, high taxes destroy economies. How can the Swedes afford second homes and boats, not to mention nice cars, after paying all those taxes? Sweden is the epitome of high taxes. It is one of only two modern countries where taxes account for more than half of the GDP (the other is Denmark).

The tax take in Sweden and Denmark, as a share of the economy, is 85 percent greater than in the United States, according to the OECD. Surely, then, America must be prospering while Sweden and Denmark sink into a pit of economic despair.

Image by Flicker user Squirmelia used under a Creative Commons license

I came across more good news from the IRS today (well, Friday actually) and I'm not really sure what to do with myself. BNA reported late on Friday afternoon that Lisa McCaughey, a senior tax analyst with the Small Business/Self-Employed Division reported that the IRS is reducing the staggering number of audits they conduct each year of taxpayers who claim the earned income tax credit (EITC). Woohoo!

In a speech during a low-income taxpayer clinic workshop of the American Bar Association Section of Taxation, McCaughey said "We are currently reducing the number of EITC audits we do overall. You might see it shift [downward] again next year."

This is very good news indeed. It would be difficult for the IRS to conduct more EITC audits than they have in the recent past. We have highlighted the near obsession the IRS has with low-income folks who claim the EITC. In fact, IRS data shows that upwards of 40 percent of all audits they conduct are of EITC filers even though EITC errors only account for about 3 percent of the tax gap.

What is going on over at the IRS? First they decide not to renew a contract for services that should be handled by IRS personnel anyway, and now they decide to reduce the number of EITC audits they conduct to focus on more efficient ways to close the tax gap. It's almost as if the influence of the current administration is waning a bit and the IRS is free to do things that are...you know...logical.

Via Shaw Fremstad at Inclusionist, we read in the Wall Street Journal that even the highly educated have seen their real earnings decrease since 2000.

The inflation-adjusted median salary for people with professional degrees [such as doctors and lawyers] was $89,602 in 2007, up about 3% from 2000, when the median salary was $87,158, according to the Census.

Every other group, including those with college and doctorate degrees, saw income declines. The inflation-adjusted median salary for a person with a bachelor's degree fell about 3%, adjusted for inflation, to $47,240 last year from 2000. Median master's-degree salaries fell about 4%, to $56,707. Salaries for high school graduates fell about 3%, to $28,290.

Given the faltering economy, it is unlikely that lower-earning Americans have made up ground this year. In 2007, the last year for which the Census income data are available, wages grew and unemployment averaged a low 4.6%. Since then, the country has lost about 600,000 jobs and the unemployment rate has risen to 6.1%.

But I'm pretty sure this won't keep the WSJ's editorial page and its ilk from claiming that increasing inequality would go away if people would just go out and get a college degree already.

CongressDaily and CQ are both reporting that Congressional Democratic leadership are signaling that they will attempt to move a second stimulus package before they adjourn for the year.

"The state of the economy is very desperate," Reid said on the floor as he discussed the agenda for the rest of the month before the Senate is expected to adjourn -- possibly for the year. "Since we left here for a recess ...we have only more bad news, which means we should look forward ... during this work period to see if we can do an economic stimulus bill."

Reid cited increasing unemployment and the stubbornly shaky housing market as other reasons for another stimulus.

"And the news of the day -- the federal intervention on Fannie and Freddie -- is but the latest evidence that our economy is in serious trouble," Reid said.

"I don't think rebates will be part of the package,'' he said Tuesday, while stressing what he called a need for more infrastructure spending and assistance to unemployed and low-income Americans.

Hoyer said infrastructure spending will be a major element of any package. He also listed home heating assistance, expanded unemployment benefits to deal with the nation's rising jobless rate and expanded federal help to the states for Medicaid programs.

Hoyer's suggestion, thankfully, has quite a bit in common with the common-sense list of suggestions put forth by the Coalition on Human Needs and the Emergency Campaign for America's Priorities in their Towards Shared Recovery proposal.

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This morning's release of jobs and unemployment data continue the streak of unhappy economic data. In August, the unemployment rate jumped to 6.1 percent from July's 5.7 percent. The jobless rate has not been this high since Sept. 2003. Employers surveyed by the Bureau of Labor Statistics reported that they had cut 84,000 jobs since July. However, the 17,000 jobs added governments hides the 101,000 job losses in the private job market. Since January, private employers have reduced payrolls by over 750,000 jobs.

The data are further evidence that the economy will continue slow in the coming months.

The report may fuel concern that consumer spending, the biggest part of the economy, will decline and bring the expansion to a halt. Stock-index futures dropped, Treasury notes climbed and the dollar pared gains.

"`It certainly increases the probability that we really are in a recession,"' William Poole, former president of the Federal Reserve Bank of St. Louis, said in an interview with Bloomberg Television. "It is a weak number, including the revisions.'"

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