But Does it Spell S-t-a-g-f-l-a-t-i-o-n? Per a report released yesterday by the Bureau of Labor Statistics (BLS), wholesale prices in the U.S. leapt by 6.3 percent, the largest calendar year increase since 1981. The surge was lead by a 18.4 percent increase in energy costs, with gasoline prices up 37.1 percent. Producer food prices increased 7.4 percent in 2007, the largest hike in four years.

The Congressional Budget Office released a paper today, Options for Responding to Short-Term Economic Weakness, that offers an economic stimulus proposal that differs somewhat with what both Democrats and Republicans have been suggesting. CBO argues that a mix of cash rebates -- which many have advocated -- and a "patch" to further extend higher exemption levels under the alternative minimum tax through 2008 -- a curious approach -- would be among the optimal stimulus tools.

That Heritage piece to which I linked earlier - Tax Rebates Will Not Stimulate The Economy - is one for the archives. I look forward to reading this for a chuckle the next time I'm feeling a bit down. Comedy gold: Economic growth requires four main factors: 1) a motivated, educated and trained workforce; 2) sufficient levels of capital equipment and technology; 3) a solid infrastructure and 4) a legal system and rule of law sufficient to enforce contracts.

OMB Watch released a new report today examining the IRS budget and enforcement policies and their impact on the tax gap. The report, Bridging the Tax Gap: The Case for Increasing the IRS Budget, focuses on three key areas in need of reform at the IRS: auditing, tax collection, and services for low-income taxpayers claiming the EITC. This report comes at the start of a new budget cycle after the IRS was given too little money to accomplish its mission of enforcing the nation's tax laws and collecting federal revenues in 2007. Because of insufficient resources and inefficient (and sometimes dangerous) policies at the IRS, over $300 billion in federal income taxes goes uncollected every year. It's time for Congress to step up: Congress has given considerable lip service to doing something about the tax gap for years but has done little to actually give the IRS the tools to make significant progress in closing it. Despite this fact, Congress has demanded the IRS close the tax gap without making more resources available for the agency to do so. Thus, the IRS has been forced to make difficult choices as to how to use the limited resources it has been allocated. As a result, at the very least, the tax gap remains a large problem, and most experts believe it has probably increased in size as the IRS has largely scaled back tax law enforcement over the last ten years. We believe its time for Congress and the IRS to get their collective acts together and make some long-overdue changes to the IRS' budget and tax enforcement policies. This report gives some first steps in how this can happen. Bridging the Tax Gap: The Case for Increasing the IRS Budget OMB Watch Press Release for Report