Federal Budget

• Election Day Ballot Initiatives Could Affect State and Local Tax Policy
• Completing Appropriations to Dominate Lame Duck Session
• Upcoming 2006 Budget Process Portends Deep Discretionary Cuts

"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.

The Economic Policy Institute released two important studies this week that offer insight into how federal fiscal policies can and do impact people.

The first study, a book titled “Exceptional Returns: Economic, Fiscal, and Social Benefits of Investment in Early Childhood Development,” argues that increased investment in Early Childhood Development programs (ECD’s) will have financial payoffs for society in the future. If the government increases spending now to provide quality education and development programs for low-income children in the early stages of life, society will end up paying significantly less in the long run in terms of costs for remedial and special education, criminal justice, and welfare benefits.

The study highlights the fact that a publicly financed, comprehensive ECD program for all children from low-income families would cost billions of dollars annually, but would create much larger budget savings over time. Policies that will serve to generate billions of dollars in budget benefits should not be ignored. This month the Congressional Budget Office reported that the final deficit for FY 2004 was $413 billion; as this study proves, however, by investing now on current programs, society will end up saving a lot of money in the future. Click here for more information on the deficit.

EPI’s second report, released today, is called “Less Cash in Their Pockets: Trends in Incomes, Wages, Taxes, and Health Spending of Middle-Income Families, 2000-2003.” The report examines certain income trends and highlights the fact that the economic well being of middle-income families has changed significantly over the last few years; and that specifically, many middle-income families lost ground between 2000 and 2003 and now have less income available to meet their needs.

Both of these important reports can be found the Institute’s web site, www.epinet.org. Their findings call into question some of the economic policy decisions that have either been made, or overlooked, by the executive and legislative branches of this country. As we face the highest deficit we’ve ever seen, it is important to keep in mind both how tax cuts really affect the middle class, and what kinds of investments the government can make now to help our economy in the future.

To learn more about how recent tax cut legislation will affect the middle-class families, read this report from the Center on Budget and Policy Priorities.