House GOP leaders have come up with a new strategy to push a permanent estate tax reduction through Congress by tying it to a minimum wage increase and extension of expiring tax breaks. The House could vote on that package later Friday, along with a final pension overhaul bill that would receive a vote in the Senate only if the chamber first passes the “trifecta” bill. The long-running, deadlocked House-Senate conference on the existing pension bill (HR 2830) would remain open as a fallback.

So putting it on the extenders package of tax cuts was not enough. Now they want to throw in the minimum wage increase. Wonder if anyone thought about the irony of passing an estate tax reduction (which would give people worth more than $5 million more money) in conjunction with an increase to the minimum wage (which still stands at $5.15 per hour and has not been increased in ten years).

Just to note, a minimum wage worker who works full time (40 hour weeks) would have to work for 466.76 straight years without taking a day off to make $5 million - assuming the worker did not need to spend any money at all that is. Maybe by that point Congress will wake up and realize how misplaced their priorities are.

The question of whether the Senate will return to consider the estate tax again this year is intimately connected to the fate of the pension conference report.

It appears meeting of the pension conference committee last night was tense and saw lawmakers expressing their frustrations with the current situation. According to media reports, a number of members present were quite forthright in their unhappiness about the House boycott of the meeting and recent events.

Senators Enzi and Kennedy expressed disappointment that House leaders failed to show up and Congressman Charles Rangel (D-NY) wondered, "How in the devil is this small group of people so powerful that they can hold hostage legislation that affects millions of working families?" Sen. Max Baucus (D-MT) and Rep. Robert Andrews (D-NJ) stated the only reason the pension conference has broken down is because of the GOP's efforts to reduce the estate tax.

But by far the most forthright comments came from Sen. Charles Grassley (R-IA):

I don’t know why you wouldn’t have guts enough to come forward and cast a vote [and be very transparent]. Nobody’s going to lose any blood by coming over here and being a man or a woman.

I don’t know what’s up, but I’m a bit shocked that others who were parties to the agreement and who accepted the benefits of the agreement and [were] the beneficiaries of my credibility are so reluctant to live up to it. I’ve kept my word and I will still keep my word even if I am knifed in the back.

It may be difficult for the conferees to repair the damage with only one day left before the House adjourns for the August recess.

Drama continues to unfold on Capitol Hill as the hot summer heat seems to be getting to members of Congress. We posted yesterday of a "showdown" meeting of members of the long-stalled pension reform conference committee that took place last night. But the meeting did not go as conference chairman Sen. Michael Enzi (R-WY) planned as House GOP conferees boycotted the meeting

Enzi called the meeting to force a vote on whether to strip a package of tax cuts (callled "extenders") from the pension bill or not and bring an end to an impasse that has delayed the reform bill in its final stages. But the strategy backfired as only two House conferees, both Democrats, showed up for the meeting. It now appears as though the entire pension reform agreement may be about to collapse. House and Senate leaders are rumored to be taking one more stab at compromise today before the House recesses until September.

The effort to pull out the extenders package is being undertaken in an effort to give the Senate one more chance at passing a roll-back of the estate tax this year. Sen. Majority Leader Bill Frist (R-TN) hopes by holding the popular extenders package until September and adding an estate tax cut to it, he will finally be able to push through another tax cut for the richest of the rich in the Senate. He has failed at three other attempts this year to do so.

More info will be posted here as events play out in Washington today.

The Washington Post is reporting on a congressional report which found that the Department of Homeland Security's (no-)bidding system is "prone to abuse."

It's a good thing, then, that Congress is working on a bill that would create a searchable database of all federal government and contracts. Indeed, a database like this would make it easier to identify potential fraudsters.

The multibillion-dollar surge in federal contracting to bolster the nation's domestic defenses in the wake of the Sept. 11, 2001, attacks has been marred by extensive waste and misspent funds, according to a new bipartisan congressional report.

Lawmakers say that since the Homeland Security Department's formation in 2003, an explosion of no-bid deals and a critical shortage of trained government contract managers have created a system prone to abuse. Based on a comprehensive survey of hundreds of government audits, 32 Homeland Security Department contracts worth a total of $34 billion have "experienced significant overcharges, wasteful spending, or mismanagement," according to the report, which is slated for release today and was obtained in advance by The Washington Post.

Washington Post: Homeland Security Contracts Abused

OMB Watch has partnered with the National Taxpayers Union to draft a letter to the Senate in support of making federal department budget justification reports public documents. The completed letter was sent to the Hill yesterday afternoon with the endorsement of 54 organizations.

Budget justifications are currently submitted to the House and Senate appropriations committees to aid in the formulation of the annual federal budget. Currently, some agencies publish their budget justifications online (see Defense and Energy), but the documents are not required to be available.

Sen. Coburn (R-OK) plans to offer amendments to the FY 07 appropriations bills requiring federal departments and agencies to post their budget justifications within 48 hours of being submitted to the appropriations committees.

Thanks to all the organizations who are lending their support to this important effort.

Read the letter

OMB Watch has been working diligently for the past few months to make information on all federal contracts and grants available online in a free, searchable database. We are navigating through the technical challenges, bureaucratic mazes, and overwhelming amount of data to make the database simple, efficient, and user-friendly. But we need your help with a very important part of our work - the name of the website.

We need a name and web address (url) that signifies the importance of this service and captures the public's imagination. We have set up a one-question survey for you to share your thoughts and vote for your favorite candidate. Please take 1 minute to help us out and vote.

Vote on the Contracts and Grants Database Name

Legislation to create a free, public, searchable database (S. 2590) containing grants and contracts spending information is gaining momentum in the Senate this week. OMB Watch testified in support of this bill at a subcommittee hearing last week of the Homeland Security and Governmental Affairs Committee and this week on Thursday the full HSGAC committee will mark up a consensus version of the bill. The bill is expected to pass the full committee unanimously.

The list of Senators supporting the bill has also increased recently, with 10 cosponsors spread out broadly on the political spectrum. This should certainly help for quick and easy adoption of the bill on the Senate floor. The current cosponsors are below:

Sen George Allen (R-VA)
Sen Tom Carper (D-DE)*
Sen Hillary Clinton (D-NY)
Sen John Cornyn, John (R-TX)
Sen Jim DeMint, Jim (R-SC)
Sen Johnny Isakson, Johnny (R-GA)
Sen John McCain, John (R-AZ)*
Sen Barrack Obama, Barack (D-IL)*
Sen Rick Santorum, Rick (R-PA)
Sen John Sununu (R-NH)

* = original cosponsor

Over the past few months, OMB Watch has been working closely with Sens. Tom Coburn (R-OK) and Barack Obama (D-IL) on a bill to create a free, searchable database available to the public containing information on all federal spending - both grants and contracts. This legislation (S. 2590) continues to move forward in the Senate and OMB Watch remains strongly supportive of it (see the OMB Watch website for more information on the bill and to access previous coverage on this by OMB Watch. You can also read recent media coverage of the effort.)

New Effort for Transparency and Disclosure Underway
To further support transparency and disclosure of budget information, OMB Watch is joining with the National Taxpayers Union to rally support for a legislative effort to require posting of all departmental budget justifications online (excluding any sensitive security information). Budget justifications are contain details of agencies' spending priorities and outline budget allocations from previous years, and are compiled by federal offices and agencies for the congressional appropriations committees in order to help them develop their budgets each year. Currently, there is no way for the public to access these documents and no reason for them not to be available.

Please consider signing-on to this joint letter supporting the disclosure of agency budget justifications. This is a basic good government proposal that will help to bring about a more effective and efficient government.

Deadline for Sign-ons is next Tuesday, July 25 at 6:00 pm. Please email Adam Hughes at ahughes@ombwatch.org to sign your organization on.

In the considerably divided legislative body that is Congress, it is rare to see a bill gain so much positive attention from both sides of the aisle. It has also gained the support of a whole slew of advocacy groups from all stripes of the ideological spectrum. As a staunch proponent of S. 2590, OMB Watch’s Executive Director, Gary Bass, testified before the Senate Homeland Security and Government Affairs Committee Subcommittee on Federal Fiscal Management this week in support of this bill.

But the bill is also gaining a lot of attention in the press as well. See, for instance, these editorials in two of the nation’s most widely-read newspapers.

The Washington Post:

Why doesn't the majority, which pays for all this waste, rise up in revolt against the sheer gluttony of it?

The answer is that the taxpaying majority doesn't care, not least because it is oblivious. But maybe there is hope. In the era of online political organization and Internet search, information on pork-peddling scandals ought to spread faster and more widely.

The Los Angeles Times:

It's hard to find fault with legislation that promotes such transparency - and it's no surprise that there are enthusiasts on both sides of the aisle, including co-sponsors Sens. Barack Obama (D-Ill.), Thomas R. Carper (D-Del.) and John McCain (R-Ariz.). A refreshingly motley combination of interest groups, including Greenpeace, the Heritage Foundation, the Family Research Council and the National Gay and Lesbian Task Force, are also onboard.

UPDATE:
The Christian Science Monitor was another major paper carrying coverage of the effort to enact this legislation:

A Move to Lift the Veil on U.S. Spending

In today’s Washington Post, Robert Samuelson chides President Bush for boasting about a $300 billion deficit, but finishes his column by shifting some of the blame for the atrocious fiscal policies of the Republican Congress and President to the Democrats.

For fiscal 2006, which ends in September, the administration projects a $296 billion deficit; for fiscal 2007, the estimate is $339 billion. How could anyone boast about that? [...]

I have reserved my harshest scorn for Republicans, who are (after all) in power. But Democrats aren't much better. The nub of the matter is spending. When Republicans passed the Medicare drug benefit -- the biggest new program in decades -- Democrats actually advocated a more costly version. Whenever anyone suggests curbing spending, Democrats screech: Spare Social Security and Medicare. But Social Security and Medicare are the problem.

Just as Republicans now say their policies have cut deficits, Democrats contend their policies produced budget surpluses from 1998 to 2001. Nonsense. Those surpluses resulted mainly from the end of the Cold War (which lowered defense spending) and the economic boom (which created an unpredicted surge of taxes).

Nonsense, indeed. Mr. Samuelson’s treatment of Democrats with respect to the current fiscal situation omits several critical facts that completely undermine the thesis that Democrats should share blame for the current budget deficit: Democrats support PAYGO, Democrats are willing to raise taxes, and Democrats are not in power.

Firstly, Democrats support fiscally disciplined "pay-as-you-go" rules, or PAYGO; Republicans do not. PAYGO rules require that increases in spending or decreases in revenue be matched with offsetting revenue or spending measures. These rules were in place until 2002; the same year that the federal budget flip-flopped from surplus to deficit.

Republicans have consistently thwarted Democratic attempts to re-implement PAYGO to restore fiscal discipline. The most recent and salient example of how Democrats and Republicans fundamentally differ is the recent Senate Budget Committee passage of Sen. Judd Gregg’s (R-NH) Stop Overspending Act 2006. By a party-line vote, Republicans defeated ranking committee member Sen. Kent Conrad’s (D-ND) attempt to attach a PAYGO amendment to the bill.

Another significant difference between Democrats and Republicans with respect to the budget is the Republicans’ rigid opposition to tax increase (and conversely, their unquenchable thirst for tax cuts). Mr. Samuelson likes to thrash the spending policies of Democrats, but fails to appreciate their preferred tax policies. Mr. Samuelson attributes the surpluses of the 90s to defense spending cuts and a booming economy. While both of these things occurred, you can see on the chart below that defense cuts are only a fraction of the story. Where that red line begins a precipitous drop is the same moment when President Clinton and a Democratic Congress raised taxes in 1993.

And finally, the Democrats control nary a branch of the government. So, it seems quite odd that Mr. Samuelson lays any of the blame of the budget deficit on the Democrats. He cites their support for a more expensive Medicare drug plan - a plan that didn’t pass Congress - as part of the reason why Republicans pass such expensive spending measures and refuse to find revenue sources for those measures. Yet, somehow, because Democrats voice opposition to spending cuts in Medicare and Social Security, - never mind that these two programs are wildly popular among all Americans, red and blue state alike - we are saddled with unending budget deficits. This is a bit of Mr. Samuelson’s logic I truly fail to grasp.

While the economy, as Mr. Samuelson asserts, "has little to do with the White House's economic policies", PAYGO rules and tax policy are fully controlled by the federal government. So, while the Democrats cannot take credit for the booming economy of the 90s, they can take credit for the federal budget policies that lead to the surpluses of the 90s. Blame for the train wreck that is our federal budget can be put squarely on a Republican Congress and President that have no appetite to raise taxes or to implement budget rules that force fiscal discipline.

click on image to englarge

CQ Today is reporting that Senate Budget Committee Chair Judd Gregg (R-NH) doesn’t think he has the votes to overcome a Democratic filibuster of his committee-passed Stop Overspending Act 2006. His measure would implement a bevy of spending-control measures - measures which open up a backdoor to cutting Social Security. Also included in his bill is a version of line-item veto. And, not only is SOS not likely to make it to the Senate floor, but prospects for passage of a separate, standalone line-item veto bill look dim.

Included in CQ Today’s article is this interesting bit from Gregg:

Gregg complained that Democrats are playing election year politics by charging that his plan is aimed at slicing Social Security.

Which is funny because in this same article is this:

Passage of that legislation would be a "political victory" that would not address long-term problems posed by growing entitlement programs, Gregg said.

Growing entitlement programs...hmmm...what could he be referring to? Perhaps the two largest entitlement programs - Social Security and Medicare?

In advance of a Senate Appropriations subcommittee markup, opponents of current efforts to prohibit the IRS from outsourcing its collection of outstanding taxes have come out in force. The head of the Association of Credit and Collection Professionals sent a letter to Senate appropriators on July 14 asking them to oppose any amendment that would prohibit the IRS from using any of its fiscal year 2007 funds to hire private debt collectors.

This effort to allow the IRS to continue with a controversial program to outsource its tax collection is shameless and self-motivated. Under the provisions of the program, the companies being used to collect overdue taxes would be allowed to keep 22 - 24 percent of the money they collect.

Thanks to the dedicated effort of Rep. Steve Rothman (D-NJ), the House passed the FY 2007 Transportation-Treasury appropriations bill with an amendment prohibiting the use of any resources to implement the outsourcing program. After hearings on the issue with the Commissioner of the IRS, it was discovered the IRS could expand its enforcement and compliance efforts and collect the same money, but without the almost 25 percent "users fee" imposed by the private collection agencies.

Unfortunately, no Senator offered the Rothman amendment yesterday during the markup of the Senate version of the appropriations bill. The bill will be on the Senate floor tomorrow and if no amendment is offered to stop funding for this ridiculous waste of government resources, the issue will move to a conference commitee on the appropriations bill. It is very likely the Rothman amendment will be stripped at that time.

More to come on this program as the week moves on.

Gary Bass, Executive Director of OMB Watch, testified today in front of the Senate Homeland Security and Government Affairs Committee Subcommittee on Federal Fiscal Management in support of S. 2590, a bill to require the government to create a user-friendly, searchable, online database available to the public containing comprehensive information on all federal spending.

OMB Watch has been supportive of this legislation and has worked closely with the bill's cosponsors (Sens. Tom Coburn (R-OK) and Barrack Obama (D-IL)) over the past month and is very optimistic about the bill passing the Senate.

You can read previous commentary on this bill on the OMB Watch Budget Blog (6.23.06, 6.22.06, 6.21.06, 5.31.06)

You can also read Gary's testimony on the OMB Watch website.

According to Congress Daily (subscription req’d), the Senate Appropriations Committee will go to work this week:

...the panel [is] scheduled for a marathon session Thursday to consider legislation funding the lion's share of federal discretionary spending, or nearly 78 percent of the total $872.8 billion allotted to the panel for FY07.

On tap are the Defense, Labor-HHS, Military Construction and Transportation-Treasury measures...

Well, good luck with all that. With only one appropriations bill (Homeland Security) passed by the full Senate, it is unlikely we’ll see a full compliment of spending bills before the end of the fiscal year on September 30th.

Posted by Craig Jennings, 02:00:14 PM

Tuesday, July 11, 2006