Spending Bill Highlights

Although the FY2005 spending bill won't officially be passed by Congress or signed by the President for a few more days, the bill is pretty much complete. For good highlights and assessments of the bill, check out the following two sources:

Senate Republican Policy Committee Summary
House Appropriations Committee Press Release

For the latest information on the tax return provision included in the spending bill, check out this Washington Post article.

read in full

Watcher: November 30th, 2004

Federal Budget

read in full

Spending Bill Will Remain On Hold Through Early December

Although it was passed by both houses of Congress last weekend, the FY2005 spending bill will remain on hold and will not go to the President for a signature just yet. Problems arose last week when Senate staffers discovered that the omnibus spending bill included a tax-return provision that shouldn't have been in there. The provision, if passed, would have given appropriators and their "agents" unprecedented access U.S. taxpayers' returns.

Both Republican and Democratic lawmakers supported removing this provision from the omnibus spending bill, however a correcting resolution won't be passed until the House and Senate reconvene on December 6th and 7th, respectively, to fix the controversial rider. House Minority Leader Nancy Pelosi (D-CA) made it clear that Democrats would not give unanimous consent to make the change on a voice vote, so the omnibus is pending until lawmakers return for a second lame-duck session. Pelosi argued that this extra time will give lawmakers a chance to read the bill, so that they know exactly what they are passing. Congress passed a continuing resolution to fund the government while the omnibus pends; it expires December 8th.

It is clear that flaws in the budget process are responsible for this mess. Not only are nine of the thirteen appropriations bills being passed almost two months after the end of the fiscal year, but a highly detrimental provision almost slipped throught the cracks of a bill that is thousands and thousands of pages long. When lawmakers and their aides are given the opportunity to slip these types of riders and provisions into massive, must-pass legislation, it is not surprising that situations such as this arise. For more information on this issue click here and here.

read in full

Tax Provision Holds Up Spending Bill

Over the weekend Congress passed a $388 billion spending bill that included funding for the nine appropriations bills that remained unfinished when the fiscal year ended on September 30th. The massive omnibus bill was scheduled to go to the White House to be signed by the President early this week, however it was held up on Capitol Hill as lawmakers rushed to remove a provision from the bill that wasn't supposed to be there.

The provision, buried on page 1,162 of a 3,600 page document, would have given House and Senate Appropriations Committee staffers the power to enter IRS facilities and examine American's tax returns. This right is only currently available to the tax-writing committees of the two chambers. Embarrassed Republican lawmakers expressed surprise that this provision was included in the omnibus and blamed both the IRS and congressional staffers for incorporating it into the bill. Once it is removed, it will be sent to the White House.

The process of passing all unfinished spending bills in a massive omnibus is detrimental because it is more secretive and rushed than it would be if the spending bills were each passed separately, and on time. According to this informative Washington Post article, "When the measure was rushed to the floors of the two chambers on Saturday, few members had read it." Professor of Public Policy Allen Schick noted that the inclusion of this provision shows "how easy it is to put something in [an omnibus bill] without anybody else knowing about it."

Fortuntely this provision was caught before the bill was signed by the President. It does demonstrate, however, the problems of a process that allows this to take place. As Representative Ernest J. Istook (R-OK) stated, "We have a problem with how bills like this are put together." Senator Kent Conrad (D-ND), who serves as the ranking Democratic Member of the Senate Budget Committee, also comments on this issue in his floor statement on the subject, which you can read here.

For additional information, see this Washington Post article.

read in full

Congress Works To Pass Debt Ceiling Increase

This week Congress is voting to raise the debt limit by approximately $800 billion. The debt limit, which before this week was set at $7.4 trillion, serves as a ceiling that reflects the legal amount that the government can borrow. Although the Bush administration claimed in 2002 that the debt limit would be adequate until 2008, their prediction was incorrect. When Congress raises the level this week, it will mark the third time since 2002 that it has needed to be raised. See this Watcher article for more information.

On November 17th, the Senate voted 52-44 to increase the debt limit, and the House is expected to vote to pass an increase today. While raising the debt limit is a necessary manuever in order to ensure that normal monetary transactions continue, the frequency with which this has happened over the past three years should cause alarm.

The current level of debt is harmful to the economy; it threatens the stability of Social Security and Medicare benefits, and it also increases interest rates, slowing economic growth. And serious debt reduction will be extremely difficult in the future. Federal revenue is currently at its lowest in half a century, at just 16.2 percent output. President Bush's push for permanent tax cuts along with the ever increasing cost of the war - in tandem with this low level of revenue - will make it difficult for this government to reduce either the national debt or the yearly deficit.

Congress' work this week to increase the amount of money the government can borrow is necessary yet somewhat fruitless; the increase is needed to fund programs and agencies, yet it is driving our country further into debt. Lawmakers should ask themselves, as they continue to increase the debt limit on an almost annual basis, who will end up bearing the majority of this burden in the future.

For more information on the debt limit and the budget see this Center for American Progress article.

read in full

Overtime Amendment Stripped From Omnibus Spending Bill

On August 23rd a new overtime rule went into effect revising the standards around who is eligible, under the Fair Labor Standards Act, to receive overtime pay. The Labor Department's rule raises the overtime eligibility threshold from $8,060 to $23,660 annually. When the rule went into effect there was widespread speculation that the changes could result in as many as six million workers losing their overtime eligibility.

In passing their versions of the FY 2005 Labor-HHS spending bill, both the House and the Senate voted against the administration's wishes and included overtime amendments in their versions of the bill. Those amendments, sponsored by Rep. David Obey (D-WI) and Senator Tom Harkin (D-IA), would have reinstated old overtime eligibility rules, and were seen as a major victory for workers.

The Labor-HHS spending bill will most likely be passed in an omnibus by Congress this week during the lame-duck session. Unfortunately, the amendment designed to curb the Labor Department's ability to enfore their new overtime eligibility rules will be stripped from the omnibus appropriations bill. As a Senate GOP aide stated, "We're heading toward most policy pieces being taken out of the omnibus.... They're time consuming, and the president won't sign most of them."

While it can be considered a theoretical victory that both houses of Congress supported important overtime amendments, it is definitely a significant loss that the amendment will be ultimately stripped from the omnibus bill. When the appropriations process is reduced to passing most of the bills through an omnibus however, it is not surprising that important policy amendments are not receiving the time and deliberation that they deserve.

To read more about the consequences of changing overtime eligibility standards, click here.

read in full

Watcher: November 16th, 2004

Federal Budget

read in full

Economic Policy: Looking Ahead To A Second Term

As President Bush faces a second term, one of his first actions will be to define his goals and lay out agenda for the next four years. As Bush outlined on November 3rd, two of his most ambitious plans include both reforming the federal tax code and making changes to social security, all while continuing to fight a war against terrorism.

While this ambitious agenda is perhaps helped by the fact that the President has majority support in both Houses of Congress, it is hampered by some of the policy changes he forced through during his first term. Bush begins his second term with the economy in somewhat of a different state than he faced when first taking office. While in 2000 the nation enjoyed a healthy budget surplus, this year has the nation facing a large deficit as well as growing homeland security and defense needs. Federal tax revenue was $100 billion lower this year than it was when Bush first took office. On top of this, spending was $400 billion higher. This large discrepancy between revenue and spending has helped to create the largest budget deficit in our history. And, in response to four years of rising budget deficits, the Treasury announced on Wednesday that the government will borrow $147 billion in the first three months of 2005, to help fund its programs and policies. This level of borrowing, when it occurs, will be a new quarterly record.

Thomas Mann of the Brookings Institution recently said, "On the domestic side, huge budget and current account deficits, historically low federal revenues as a share of GDP, the approaching retirement of the baby-boom generation, health care cost inflation, and escalating spending pressure for homeland security and defense will handcuff a president hoping to pursue new policy initiatives.

This administration will seriously be looking into trying to make permanent some of the tax cuts they passed over the last four years, and Bush has already laid some of the groundwork for this. Permanent tax cuts would greatly impact the amount of federal revenue collected by the government, and would cause even greater financial strain for agencies and institutions that rely on the government for funding. It is estimated that permanent tax cuts could cost the government $1 trillion dollars in revenue between 2005 and 2014.

When Bush sends his version of the budget to Capitol Hill early next February, it will clearly demonstrate how far this administration is willing to go to push the policies they outlined at both the Republican National Convention and on the campaign trail. For more information on second-term tax and budget issues, click here and here.

read in full

Watcher: November 2, 2004

Federal Budget

read in full

"In These Times" Critical of Bush's Federal Economic Policy

"In These Times," a magazine committed to extending political and economic democracy, is publishing a series of retrospective analyses of the Bush record this week. Along with tackling foreign policy, education, health care, and a variety of other issues, the series highlights five different economic areas where Bush's policies have gone awry. The article focuses on:

- Bush's jobs loss record

- The unprecedented rise in home prices

- The overvalued dollar and the trade deficit

- The threat that structural budget deficits will continue far into the future

- The effects of massive military spending on the U.S. economy

The article can be found here.

read in full

Pages

Subscribe to The Fine Print: blog posts from Center for Effective Government