House May Vote on PAYGO as Early as Next Week

PAYGO legislation continues to move through Congress and may come up for a vote as soon as next week. 

Added: CBO responds to Rep. Paul Ryan's request for analysis of the proposed policy.

Added 7/17: Access the latest information and version of the bill here

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Anti-debt Commission Proposal Makes Another Appearance

Last week, the House Appropriations Committee approved the 2010 fiscal year Financial Services spending bill.  Along the way, one of the amendments that failed to make the cut was to "enact into law H.R. 1557 (the “Securing America’s Future Economy Commission Act”)".  This amendment would've created a 16-member commission charged with creating recommendations to reduce the country's long-term debt.  With a maximum of four members of Congress, this commission would have had the power to create legislation that would be considered by the House and Senate. 

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Medicare is the Culprit

On July 8th, Peter R. Orszag, the Director of the Office of Management and Budget, wrote a letter to Reps. George Miller (D-CA), Charles Rangel (D-NY), and Henry Waxman (D-CA), to express the Administration's support for the policy changes that have been discussed thus far.  After commending their efforts thus far to make policies deficit-neutral, Orszag writes that these changes are not enough.

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Obama Seeks to Eliminate Tax Benefits for Multinational Corporations

The Obama Administration continues to look for ways to find tax revenue and as a result, several significant tax breaks for multinational companies may be on the chopping block.  During the Bush and Clinton Administrations, it became easier for controlled foreign corporations (CFCs) to conduct financial transactions between offshore subsidiaries at much-lower effective tax rates (or in some cases, tax-free).  If Obama gets his wish, these tax breaks will not be renewed at the end of 2010 and the Joint Committee on Taxation estimates will result in an increase of $31-86.5 billion in tax revenue from 2011-2019.

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PAYGO*

President ObamaThe White House is making moves to address the growing concern over the budget deficit but the results may be lukewarm.  The details of the program have yet to be announced but in an effort to display fiscal discipline, the Administration is likely to announce a set of budget control initiatives, such as pay-as-you-go (PAYGO).  With the honeymoon effect fading, poll numbers indicate that the American public is beginning to express concern over who will eventually foot the bill for all of the recently proposed federal spending.

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Talk of Fiscal Responsibility Returns to Capitol Hill

Fed Chairman Ben BernankeTalk of fiscal responsibility returned to Capitol Hill yesterday when Federal Reserve Chairman Ben Bernanke testified at a hearing of the House Budget Committee. Bernanke tried to push Congress and the Obama administration to start planning now to tackle the monumental deficits expected over the next few years.

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Obama Releases Details of Tax Plan

President ObamaPresident Barack Obama announced today a plan that seeks to close loopholes used by companies and individuals to avoid paying taxes. In particular, Obama wants to make companies pay the proper tax rate on overseas profits and aggressively pursue those who use offshore tax havens to intentionally avoid paying taxes. His proposal is estimated to generate about $21 billion in revenue each year.

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Lack of Audits of Financial Services Firms Distressing

IRS paperwork

Despite the news from last week that the IRS is staffing up and hiring thousands of additional revenue agents and officers, there is new data out from the IRS that is a bit depressing. The Transactional Records Access Clearninghouse (TRAC) released a new report today that shows the IRS continues to do too little to audit financial services firms, particularly those with over $250 million in assets.

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IRS Stepping it Up!

BNA reported (sorry, no link) last night that the IRS is set to step up its enforcement of the tax code by hiring additional revenue agents and officers. While you might not like the IRS, this is great news for starting to chip away at the $345 billion annual tax gap. Deputy Commission for Services and Enforcement Linda Stiff gives more details.

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Bush's Priorities: Entitlements vs. Tax Cuts

As this excellent column from Bloomberg.com highlights, there is a gap between the administration's rhetoric and reality when it comes to tackling the long-term budget implications of the rising costs of entitlement spending. Bush spent a lot of time last year making a big deal about the unfunded Social Security liability, and the liability for Medicare is expected to be even greater, with the administration estimating an $11 trillion shortfall.

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