About a month after the White House released its highly misleading and overly optimistic budget projections, the Congressional Budget Office (CBO) released their projections today. The CBO report projects a $331 billion deficit for FY05, a $33 billion reduction since they released an initial estimate earlier this year in March. CBO also has increased their estimate of the total deficits over the next ten years by more than $1.1 trillion to $2.1 trillion. These estimates are much more worrisome than OMB projections released last month as CBO and OMB differ over the ten-year deficits from 2006 - 2015 by more than $600 billion. Unlike the OMB numbers, CBO finds very little reason to be optimistic about the future health of the federal government. They write, "Although the deficit for 2005 is lower than previously expected, the fiscal outlook for the coming decade remains about the same as what CBO described in March." In March, CBO described a very dark future if current policies are continued. This CBO report casts further doubt on administration claims that their economic policies are working to spur strong economic growth and will continue to shrink deficits. CBO has confirmed what many private analysts have reported - that the recent jump in federal revenues are due to short-term and temporary factors that are unsustainable and that over the long-term, the country still faces many large and difficult fiscal challenges. CBO concludes, "Over the long-term, then, growing resource demands...will exert pressure on the budget that economic growth alone will not eliminate." Most strikingly, the CBO report states that if the tax cuts from the administration's first term are extended (with the exception of policies related to the alternative minimum tax), as President Bush has been strongly advocating, deficits over the next decade would increase $1.6 trillion on top of their current projections. The Senate Budget Committee's most senior Democrat Kent Conrad (D-ND) believes the nation needs a "serious fiscal wake-up call" if we are to correct the long-term budget shortfalls that "threaten our economic security." It's time for President Bush to be straight-forward with the American people and begin an honest conversation about adopting alternative policies that will return the country to a sound and sustainable fiscal foundation.

President Bush has once again weighed in on the estate tax issue, claiming the tax needs to be repealed to establish "certainty in the tax code." All sides in this debate agree with President Bush's concern for the need for certainty, but that can easily be achieved by adjusting the tax structure and moving beyond the phase-out system put in place by Congress in 2001 without repealing the tax. As with Social Security, there are only a few minor adjustments needed to achieve a prudent compromise policy on the estate tax, but for some reason President Bush is more interested in scrapping the tax entirely. It seems clear who's best interests President Bush has at heart.

July's employment numbers released by the Bureau of Labor Statistics (BLS) showed that the nation's employers have picked up their hiring pace, as payrolls expanded by 207,000 jobs. This was significantly better than both May and June's numbers and bumped the average monthly growth rate for jobs to 191,000 in 2005. There remain many problems with the economy and job market as we continue to slowly move through this economic recovery. First, almost all of the new jobs created in July were in the service industries (generally lower paying jobs with worse benefits) as the employment picture is still very bleak in the manufacturing and good producing sectors (generally higher paying jobs with better benefits). The lack of a rebound in the manufacturing sector continues to be a large problem, particularly for Americans who have been unable to find sufficient employment to replace wages lost when they were laid off their manufacturing job. Second, and perhaps more importantly, job creation is still lagging significantly behind population growth. If job creation and population growth continue along at their current pace, the employment outlook will continue to worsen with each passing month. Read More...

• July Employment Summary from the BLS
• Statement from the Center for American Progress
• July Jobs Picture Analysis by the Economic Policy Institute

One of the first items the Senate is expected to take up when it returns in September is a House-passed bill to permanently repeal the estate tax, and it is quite likely that this repeal bill will ultimately serve as a vehicle for an estate tax reform proposal by Senator Kyl. In order to consider the House-passed bill, the Senate first needs to adopt a motion to proceed to the bill. Under Senate parliamentary rules, it requires 60 votes to “invoke cloture” and vote on this motion. Defeating cloture is the key step to block efforts to repeal the estate tax or prevent enactment of an irresponsible estate tax reform. Now is the time to make calls to your Senators and urge them to:

1. Vote NO on cloture on the motion to proceed to the estate tax bill; and 2. Oppose any reform effort, such as the Kyl proposal to link the estate tax rate to the capital gains rate, that does not preserve a major portion of the estate tax revenue.

For more information: Read these Talking Points