Treasury Secretary John Snow announced yesterday that the President's Advisory Panel on Tax Reform will delay its tax report until the end of October. This delay apparently comes at the request of the administration, who Snow said is concerned that a sooner release would doom it to the "back pages" of newspapers because of the extensive coverage we are currently seeing with Hurricane Katrina aftermath. Another Treasury spokesman said that with such a full agenda, "there is little capacity for public focus on the full debate and dialogue that this key presidential priority deserves." While finding ways to reform the tax code is important, it is hard to tell if the panel and their work is going to have any impact whatsoever. Not much information is available regarding what exact recommendations they are supposed to make to the Treasury Department. The panel has been extremely vague about their actions; in their emails announcing meetings they say they will be discussing "issues surrounding tax reform," and rarely do they delve much deeper than that. BNA has reported that Snow expects they will work to fix the laws relating to the alternative minimum tax, but few other policy priorities are known. We will see with the release of the report in October what exactly the tax panel has in mind. After that, it will be up to Congress and the President to find the time to even make tax reform a priority, or else this panel's report will do little more than collect dust.

Finance Committee Chairman Charles Grassley (R-IA) and ranking member Max Baucus (D-MT) are planning to introduce a health care package to assist victims of Hurricane Katrina. The package will expand Medicaid eligibility and provide 100 percent federal reimbursement for Medicaid coverage to states who have seen an influx of displaced persons. Baucus said new Medicaid provisions were needed to provide health care to victims who have lost homes and jobs. The devastation from Hurricane Katrina has plunged thousands of people into unemployment and poverty, resulting in a huge increase in the number of people who are now eligible for Medicaid. At the same time, hospitals and clinics -- especially in the south -- are being flooded with people in need of medical care, which is putting a growing burden on the already-fragile public health infrastructure of many major cities. Well before this natural disaster took place, hospitals and clinics across the country struggled to take care of local patients who didn't have insurance to cover all medical costs. Congress, in fact, included instructions in the budget resolution for $10 billion to be cut from mandatory programs under the jurisdiction of the Senate Finance Committee (like Medicaid). While the date for reconciliation has been pushed back, Majority Leaders Bill Frist (R-TN) and other Congressional GOP leaders are saying they want to go ahead with cuts to these entitlement programs. Those cuts would put cost strains on states not directly impacted by the disaster, ultimately leaving taxpayers to foot the bill. So, while this Finance Committee health care package will help alleviate some of the burdens for now, keep in mind that many in Congress still want to move forward with severe cuts to Medicaid, perhaps in the very near future.

The Senate Finance committee released a set of proposals for tax cuts designed to aid the victims of Hurricane Katrina, and encourage other Americans to donate to the relief effort. Among the items included that will directly benefit hurricane survivors include cancelation of early withdrawl penalties from retirement plans, extension of the Work Opportunity Tax Credit and other provisions that would encourage hiring those displaced by the hurricane around the country and aid in the retention of employees within the disaster zone, and a relaxation of restrictions of financing to first-time homebuyers in the areas impacted for three years. In addition, the package would provide incentives for all Americans to contribute to the relief effort by increasing tax right-offs for businesses for food and books, granting an additional tax credit for those who open their homes to shelter hurricane victims, and by allowing tax-free cash donations from IRA accounts. The proposals by the Finance committee would also increase taxpayer assistance efforts by the IRS to meet the needs of those seeking to receive the benefits of these proposals.

The Congressional Budget Office released their Monthly Budget Review this week, in which they noted that for the first eleven months of this fiscal year (which ends Sept. 30), the government ran a deficit of $352 billion. For various reasons, including that fact that corporate receipts were up due to specifics in certain expiring tax laws, this deficit is $85 billion less than the deficit run at this time last year. These facts have allowed President Bush to claim that he is on track to cutting the deficit in half by 2009 (one of his many campaign promises). The reality is, the Hurricane Katrina disaster will affect deficit levels for 2006. The CBO report states that deficits will not be greatly affected for FY 2005 because we only have one month to go; however they do mention "substantially greater costs will be incurred in fiscal year 2006." It looks like we can expect deficits to be on the rise again in the year to come. The administration is not to blame for the fact that the disaster will have a negative effect on the FY 2006 deficit. However, the administration is to blame for our deficits being so high in the first place. In 2004 the budget deficit was $412 billion, and most of that was due to Bush's massive tax cuts. Now we are being forced to engage in deficit-financed spending because of the recent disaster, and the administration can claim that they had no control over what is sure to be a very high deficit figure next year. If not for their prior policies, however, our deficits would have never been so high in the first place.