Last night President Bush unveiled his initial ideas about plans for reconstruction of the Gulf Coast in the aftermath of Hurricane Katrina. The president did not mention how much he expected this to cost, how he thought the country should pay for it, or what sacrifices he expected citizens to make to help out with the efforts. Congress has already approved over $60 billion for emergency relief efforts, with another emergency supplemental expected sometime in October. The large amount of existing spending plus vague, but potentially costly plans for reconstructions has some members of Congress once again worried about deficits. Before the president addressed the nation last night, fiscally conservative members of the House and Senate held a press conference with government watchdog groups asking the President to reign in federal spending for Gulf Coast states decimated by Katrina. Sens. Tom Coburn (R-OK), John McCain (R-AZ), Jim DeMint (R-SC), and Rep. Mike Pence (R-IN) led the calls for fiscal restraint. Sen. McCain stated, "We know this is a huge bill and we don't want to lay it on future generations and Speaker of the House Dennis Hastert (R-IL) commented after the president's speech, "for every dollar we spend on this, it is going to take a little bit longer to balance the budget." But cutting relief and reconstruction efforts, or other parts of the budget is not the right answer. It is budget cuts and underinvestment that played a part in making the impact of Katrina so much worse along much of the Gulf Coast. If those conservatives are truly concerned about balancing the federal budget and not passing on debts to future generations (and not simply shrinking the size of government), they need to look at more than simply reducing federal spending - they need to reconsider the incredible number of tax cuts passed over the past five years that have driven government revenues to its lowest level in 50 years. Countless projections and estimates (see here, here, here, and here) show the combination of massive tax cuts and current policies leading to decades of unsustainable, deep, and persistent deficits. In order to truly address consistent budget deficits, and to pay for not only the relief and reconstruction efforts in the Gulf Coast, but also long-term preventative investments in the infrastrucure and people of America, the President and Congress must reverse some of the tax cuts passed over the past five years.

The Government Accountability Office (GAO) has released a report assessing the pros and cons of tax reform proposals. The report, "Understanding the Tax Reform Debate: Background, Criteria, and Questions," states "Long-term budget simulations by GAO, the Congressional Budget Office, the Office of Management and Budget, and nongovernment analysts show that absent policy changes, the federal budget is on an unsustainable path." The GAO recognizes that a change in tax policies will put us on a more sustainable fiscal path, and while this report does not offer any new policy ideas, it does give a thorough run-through of how the current tax system works and criteria for a good tax system, as well as issues that may arise when transitioning to a new tax system.

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.