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Thursday, May 01, 2008
DAILY FISCAL POLICY REPORT -- May 1, 2008
Economy -- Consumer Spending Down; Commodity Prices Up: With the overall economy growing at a mere 0.6 percent annual rate for the second quarter in a row, consumer spending advanced by only 1 percent. That was down sharply from the 2.9 percent gain for all of 2007 and the 3.1 percent gain for 2006, per the Commerce Department. Since March 2007, according to the Bureau of Labor Statistics, the price of eggs has jumped 35 percent. A gallon of milk is up 23 percent. A loaf of white bread has climbed 16 percent. Consumer Spending; Commodity Prices.
Taxes -- Summer Gas Tax Holiday Fuels Debate: With President Bush and two of the three leading candidates for president in support of a summertime suspension of the 18.4 cent-a-gallon federal gas tax, the proposal is coming under increasingly critical scrutiny. Len Berman, Urban Institute's Tax Policy Center: "Every summer, the refiners are running full out. If the price fell, people would want to drive more and there would be shortages." Harvard Professor Greg Mankiw: "What you learn in Economics 101 is that if producers can't produce much more, when you cut the tax on that good the tax is kept . . . by the suppliers and is not passed on to consumers." Wash. Post.
Stimulus 2.0 -- Democratic Leader Rules Out Action in May: The House will not pass a new economic stimulus bill this month, Democratic leader Steny Hoyer (D-MD) said yesterday, in spite of mounting evidence of widespread economic distress. Asked if a second stimulus package might come to a vote in the House before Memorial Day, Reuters reports that Hoyer said: "The honest answer to that is no." Candidates cited for action instead were an Iraq war funding bill, a fiscal 2009 budget blueprint, housing legislation, a major defense bill, and measures dealing with electronic surveillance, consumer safety, agriculture policy and higher education. Story.
Posted by Dana Chasin
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