Radical House GOP Group Gain Upper Hand, Push Budget Cuts

It seems the most "fiscal conservatives" in the House, the extremely right-wing Republican Study Committee, has gained the upper hand in their push for increased budget cuts in reconciliation. This week House GOP lawmakers will begin taking steps to cut as much as $50 billion from the FY 2006 budget. These cuts will effect areas such as health care programs for the poor, food stamps, and farm supports, and may also include across-the-board cuts in other programs. A month ago, when the RSC first called for stepped-up budget cuts in the wake of Hurricane Katrina, House leaders tried to terminate their efforts behind closed doors. However, now House leaders are embracing this call for extensive budget cuts. With the leadership in turmoil because of Majority Leader Tom Delay's (R-TX) indictment, leaders, according to the Washington Post, "had no choice but to firm up support with their conservative base... according to lawmakers and leadership aides." Part of what is driving the Republican Study Commitee, which is headed by Rep. Mike Pence (R-IN), is a concern regarding spending in the wake of Hurricane Katrina, which is projected to possibly exceed $200 billion. This group has, on occasion, criticized the administration and their Congressional colleagues for participating in what they call run-away spending. Since Bush came to office, federal spending has increased by approximately one-third, from $1.86 trillion to $2.47 trillion, and deficits have risen. What does not add up is that this same group supports the tax cut measure slated for passage in reconciliation, which amounts to $70 billion in un-offset federal spending. They also support the extension of Bush's 2001 and 2003 tax cut provisions, which would cost over $1 trillion in lost revenue over a decade. It seems that the $200 billion cost of Katrina - a one-time expenditure that will not add to the deficit for more than one year, is nothing but an excuse for these members to gain some traction for their real goal: shrinking the size of government significantly by defunding public programs which serve to help millions of people every year. It is a push for cold-hearted disinvestment in our country during a time when so many people -- both Katrina victims and others -- are in need. And it is masked in the cloak of "fiscal responsiblity." In reality, it would be difficult for the RSC's definition of fiscal responsibility to be any less responsible, both in regards in to the well-being of citizens and in regards to future deficit projections.

read in full

Inflation and Consumer Prices Up, Benefits Will Rise

This article in today's Washington Post noted that both inflation and consumer prices are up sharply. The CPI, which rose 4.7 percent over the past year, saw the biggest 12-month increase since May, 1991. The Post reported that Social Security payments will increase 4.1 percent in January for more than 50 million retired and disabled workers. The increases will help recipients keep up with inflation, which was up last year mainly because of rising energy costs. Energy prices were up 35 percent over the past 12 months.

read in full

The Effects of Chronic, Large Deficits

The Congressional Budget Office released a report titled Long-Term Economic Effects of Chronically Large Federal Deficits yesterday. The report discusses how deficits affect national saving, financial markets, and capital inflows. The report points out that while temporary deficits (such as those brought about by unanticipated spending for events such as Hurricane Katrina) can serve to support economic activity, large federal deficits (such as those created by chronic tax cutting) serve to reduce future living standards by "slowing the accumulation of national wealth as they lower national saving.... by shifting resources into public and private consumption through increases in federal spending cuts in federal taxes." The report also notes that policies which increase the deficit but also "provide incentives for people to work, acquire more skills and education, undertake research and development, invest, innovate, or use resources more efficiently may do less harm to future living standards than policies that increase the deficit without providing such incentives."

read in full

Overview of TABOR in Colorado

Bill Chaloupka, Chair and Professor in Political Science at Colorado State University, has an excellent overview of the fight to overturn TABOR in Colorado this year in the American Prospect online. The state will vote in two weeks on a temporary, five-year suspension of the restrictive spending limits that have crippled Colorado over the past 12 years.

read in full

Davis-Bacon Suspension Angers House Republicans

After Hurricane Katrina, President Bush waived wage protections established under the Davis-Bacon Act that require federal contractors to pay area prevailing wages. While some have speculated on the legality of this decision, it has flat out angered a substantial number of House members from the President's own party, who sent a letter to him in late September expressing their outrage. This week, Rep. LaTourette (R-OH) - the member who spearheaded the effort to rally 36 other Republicans against the waiver - announced on the House floor he would be seeking legislative action to reinstate Davis-Bacon requirements. "I don't know exactly what we have in mind yet, but I think the week of the 17th [of October] there may be some activity," LaTourette said. Democrats in the House have already taking action to attempt to reverse Bush's decision. Rep. George Miller (D-CA) has introduced a bill, H.R. 3763, that will require the re-application of Davis-Bacon wage requirements to the areas affect by Hurricane Katrina. It is widely agreed the bill would pass it voted upon, but the House GOP leadership has continued to block any such vote. Make Your Voice Heard The Campaign for America's Future has launched a letter writing campaign to raise support for reinstating Davis-Bacon requirements.

read in full

Some Republicans Don't Love Every Tax Break

CongressDaily, a publication of the National Journal, reported this morning that 65 House members sent a letter to President Bush urging him to exclude gambling interests in tax cuts designed to spur reconstruction and renewal on the Gulf Coast. Lead by Rep. Frank Wolf (R-VA), the letter was signed by both Republicans and 14 Democrats and was sent in response to press reports that the administration was considering allowing casinos to qualify for tax breaks in the wake of Hurricane Katrina. The letter concluded, "We trust you will do the right thing and make sure federal resources go to the poor, the needy and the vulnerable and not the gambling interests who already have insurance to cover catastrophic events like hurricanes." It's nice to see rational and moderate Republicans (and Democrats) speaking out for the right priorities in the wake of Katrina. Now if only they would apply this philosophy across the board and oppose the extension of more tax cuts for the superwealthy paid for by budget cuts to programs for low-income Americans. Read the letter send to President Bush.

read in full

Tax Panel Talks Specifics at Yesterday's Meeting

The President's Advisory Panel on Tax Reform met yesterday in anticipation of their November 1 deadline for submitting tax code recommendations to the Treasury Department. In the meeting the panel referenced some loose conclusions they have come to regarding tax reform, mainly concerning the alternative minimum tax as well as deductions for homeownership and employer-provided health insurance. While the panel still has a few weeks before they will be submitting formal recommendations (which Bush may or may not choose to consider), they have basically come to a consensus that it would be a good idea to cap both the employee income exclusion for employer provided health care as well as the mortgage interest deduction for homeowners. There was discussion of capping employer-provided health insurance at $11,000 per employee, and mortgage interest deduction at $350,000 (for a couple filing jointly). Former GOP Senator and Chairman of the Panel Connie Mack said that the deductions as they currently exist are not shared equally, and that by pursuing caps in both areas it would result in "shifting some of the benefit to middle-income Americans." Much of the reason why the panel is interested in pursuing these reforms is because the decreased deductions would help to offset the cost of repealing the Alternative Minimum Tax (AMT), which was created to ensure that all extremely wealthy individuals would pay some taxes, but is increasingly ensnaring upper- and middle-income Americans. AMT repeal, which would cost about $11.3 trillion over ten years, was deemed to be a necessary reform by the panel months ago, however it was only at yesterday's meeting that they laid out any sort of options to offset to the cost of repeal. At yesterday's meeting the panel also recommended expanding tax breaks for charitable donations, and rejected the idea of replacing the income tax with a sales tax or a value added tax, both of which would unnecessarily complicate the tax code while placing a disproportionate financial burden on low-income families. The panel will meet once more publicly on October 18, and meet later in the month via teleconference before submitting their recommendations. They are slated to disband November 15. New York Times: "Tax Panel Says Popular Breaks Should Be Cut"

read in full

House Pushes Back Deadline for Budget Spending Bill

It appears the House Budget Committee has moved the deadline for budget reconciliation back yet again. After initially postponing the deadline post-Katrina, the committees were slated to get their spending proposals to the Budget Committee the week of Oct. 17, but Chairman Jim Nussle (R-IA) was able to push back the deadline to Oct. 28. The hope for Nussle is that this pushback will give committees an extra week to submit proposals for cutting mandatory spending to the budget panel. The Senate, apparently, will not join the House in this spending bill delay. Nussle has proposed amending the FY 2006 budget resolution to call for across-the-board cuts in discretionary spending. His proposal notably calls for cuts in both defense and homeland security spending, as well as increased cuts in mandatory programs such as Medicare. The calls for increased cuts have been increasing along with Republican restlessness over how to save money to pay for the costs of Katrina recovery. Groups such as the Committee for a Responsible Federal Budget have lauded Nussle and others for their attempts to bring down the deficit by increasing budget cuts, yet are ignoring the fact that these same lawmakers support passing $70 billion worth of deficit-financed tax cuts in reconciliation. The Democratic Senate leadership has taken steps to urge Congressional GOPs that it is more important to deal with immediate needs of hurricane victims and rising energy prices, as opposed to passing another round of tax breaks through reconciliation. Minority leader Reid (D-NV) and a number of other Democratic Senators sent a " target="_blank">letter to Majority leader Frist (R-TN) on Friday, outlining those points.

read in full

CBO Predicts $317 Billion 2005 Deficit

Yesterday the Congressional Budget Office revised their deficit estimate for FY 2005, stating that the deficit will be $317 billion. As Sen. Conrad (D-ND) said in a statement on the deficit figure, when the Social Security and other trust fund surpluses also being spent are added in, the debt in 2005 will actually increase by $575 billion. Also, while the cost of the hurricanes will not add a lot to the deficit in 2005, we can expect the 2006 deficit to increase significantly because of disaster-related spending. As the Center on Budget and Policy Priorities points out, while this figure is down from last year, it is largely due to an increase in tax collections from last year. And without the 2003 tax cuts revenues would be higher, and deficits smaller. To read more on the CBO's calculations, see their Monthly Budget Review.

read in full

Budget and Tax Cuts Will Hurt Most Vulnerable

Yesterday the Coalition on Human Needs sent a sign-on letter to Congress, requesting that lawmakers focus on addressing human needs issues in the wake of the natural disasters, rather than focus on cutting both entitlement spending and taxes. The letter was endorsed by approximately 750 groups; at least one from every state.

read in full

Pages

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