
Final Budget Bill Passed; Tax Bill Sent to Conference
by Guest Blogger, 2/7/2006
A little over a month into 2006, Congress continues its effort to finish extraneous budget reconciliation bills from 2005. The reconciliation bills, which were laid out nearly a year ago in the April budget resolution, took up much of Congress' already-limited time last fall and winter and have laid out a number of extremely irresponsible fiscal policies.
The budget bill, which finally passed on Feb. 1, will cut almost $40 billion over five years from funding for mandatory programs, while the tax bill could potentially cut up to $70 billion in taxes - primarily benefiting the wealthy. Together, these two bills will significantly increase the deficit, further enriching the wealthy at the expense of low- and middle-income Americans.
The final House approval of the budget reconciliation was, as anticipated, extremely close. The bill passed by only two votes (216 - 214). Out of all 435 House members, only two Republicans and one Democrat did not vote. All House Democrats voted against the bill, with the exception of Earl Blumenauer, who was out of town.
Thirteen Republicans broke with their leadership, voting against the misguided bill; they were Reps. Gerlach (PA), Ney (OH), Johnson (IL), Jones (NC), Latourette (OH), Leach (IA), McHugh (NY), Paul (TX), Ramstad (MN), Simmons (CT), Sweeny (NY), Smith (NJ), and Wilson (NM). The Emergency Campaign for America's Priorities, a coalition of labor unions, service providers, low-income advocates, budget think tanks, public policy groups, should be commended for mobilizing much of the public pressure on these moderate Republicans leading up to the vote.
The budget bill imposes many substantial changes on entitlement programs, Medicaid, Medicare, welfare, child support and student loan programs. As The Washington Post elegantly summarized, this move by Congress to slow the growth of entitlements will mean "[w]omen on welfare are likely to face longer hours of work, education or community service to qualify for their checks. Recipients of Medicaid can expect to face higher co-payments and deductibles, especially on expensive prescription drugs and emergency room visits for non-emergency care. More affluent seniors will find it far more difficult to qualify for Medicaid-covered nursing care."
Interestingly, the final vote came one day after President Bush announced in his State of the Union address, "Our government has a responsibility to help provide health care for the poor and the elderly, and we are meeting that responsibility." Just how our government will continue meeting that responsibility, despite significant funding cuts for government health programs, was not addressed by President Bush. Adding to healthcare concerns, these cuts came on the heels of new census data that indicates more than 46 million Americans are living without health insurance. Within the $40 billion in cuts to entitlement spending over the next five years, Medicaid and Medicare will bear the brunt of 27 percent of those cuts.
Disingenuous rhetoric aside, the cuts in this budget bill come into full perspective when compared with the cost of extending Bush's 2001 and 2003 tax cuts, a widely stated goal of his second term. Over a 10-year period the cuts from this budget bill will save approximately $105 billion, whereas the 10-year cost of extending the tax cuts is estimated to reach over $2 trillion.
Unlike the budget reconciliation bill, the tax cuts bill has yet to be completed by Congress. The Senate voted 66 -31 on Feb. 2 to approve a $70 billion version of the tax reconciliation bill. The bill includes extensions of a variety of popular tax breaks, such as business research and development tax credits and the costly one-year fix to keep the alternative minimum tax (AMT) from hitting middle-income taxpayers in 2006.
A final package must still be negotiated with the House, a majority of whose members are in favor of a very different tax bill. The House version does not include any AMT relief for 2006, instead extending rate cuts for capital gains and dividends taxes - cuts not set to expire for two full years.
Regardless of the specifics of the bill that will emerge from conference negotiations, its cost is sure to eradicate any savings achieved by the budget cuts bill already passed. In fact, the tax cuts bill will add tens of billions to the national deficit.
