Senate tax writers plan to introduce legislation this week that would repeal the unpopular alternative minimum tax. The bill, to be offered by Finance Committee Chairman Charles E. Grassley, ranking panel Democrat Max Baucus of Montana, Jon Kyl, (R-AZ), and Ron Wyden, (D-OR), will propose eliminating the tax, known as the AMT, effective January 1, 2006. It is unlikely to pass this year, however. President Bush wants the issue to be considered as part of a broad tax overhaul debate, which will most likely occur next year. Repealing the AMT would cost at least $600 billion over 10 years, the Congressional Budget Office estimated last year. The tax is expected to bring in $15 billion in the current fiscal year. Rep. Phil English, R-Pa., also introduced repeal legislation (HR 1186) in March. But congressional Republicans are expected to push a one-year extension of expanded AMT exemptions that expire this year rather than permanent repeal.

Former member of Bush's 2001 Commission to Strenghten Social Security Robert Pozen said wednesday that Bush should "back away" from insisting that Social Security reform include individual investment accounts. Pozen's comments are significant because it is his Social Security plan which has gotten the most praise and attention from an administration adamant on overhauling the nation's Social Security program. Pozen's plan would reduce the growth of Social Security benefits for all but the poorest income earners, which is why it has earned the name "progressive price indexing." It also creates small private accounts for wealthier earners who would be losing some of their benefits. In April Bush publicly endorsed Pozen's plan. Pozen's comments were made wednesday during a debate with Brookings' Peter Orszag, who has been critical of Bush's plans all along. He commented that the president's insistence on "carving out" individual accounts from a percentage of Social Security's payroll tax has polarized congressional Democrats and threatens passage of a Social Security restructuring that would deal with the program's financial problems. He said, "I would advise the president to say that carve-out accounts are no longer required." Also of importance in recent Social Security discussions, Bill Thomas (R-CA) of Ways and Means has been hinting that Social Security reform might be a good vehicle with which to push new and costly retirement-related tax cuts. The Center on Budget and Policy Priorities released this report yesterday, highlighting the point that tax cuts would do little to help out middle class families who would be hurt by Social Security benefits cuts, and would instead add to the deficit.

Federal Budget

• Congress Passes Supplemental War Funding Bill
• President's Tax Panel Holds Two-Day Meeting on Reform Proposals
• Update: More States Consider 'Taxpayer's Bill of Rights'

Once again, conservative members of the House are leading the push for process changes that would end up implementing spending caps and making it much more difficult to increase funding for programs. Rep. Mike Pence (R-IN), chairman of the Rules Committee, is responsible for resurrecting the fight for budget process reform. Budget process reform has been an ongoing issue of contention between the conservative rules committee and the House leadership. Conservatives say that the leadership has committed to a vote on reform during the 109th Congress, meaning that we could see this battle played out again. The specific legislation being reintroduced is the Family Budget Protection Act. This harmful act would not protect families; instead it would forcibly hold down federal spending and give the budget the force of the law.