Department of the Treasury

Comments on IRS Pre-Certification of EITC Recipients

The Internal Revenue Service is planning a "pilot" project beginning in August to require "pre-certification" of 45,000 Earned Income Tax Credit recipients. This effort is targeted to filers who are claiming children of whom they are not the parents. OMB Watch commented on the process and the form, which requires documentation or an affidavit to show that the children and caretakers have lived in the same household for six months of the taxpaying year. Comments on the form were due on July 14, 2003, but comments about the process may be submitted through December 31, 2003. See the IRS announcement for more details.

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Corporate Tax Havens and the EITC

While the administration continues to push for tax cuts for corporations and the very wealthy, whose tax avoidance is estimated to cost the government $75 billion a year, it is also working to establish a rigorous pre-certification process for Earned Income Tax Credit (EITC) recipients.

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Dynamic Disappointment

The Congressional Budget Office (CBO) released the final version of its March 7 report, entitled “An Analysis of the President’s Budgetary Proposals for Fiscal Year 2004.” The revised version of this report was eagerly awaited for its special section on the “Potential Macroeconomic Effects of the President’s Budgetary Proposals.” A macroeconomic – or “dynamic” – evaluation has never been offered by CBO, and both proponents and critics of the controversial scoring method were anxious to learn what the CBO report would reveal. For many, it seems that the long-awaited results were disappointing in their ambiguity.

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Treasury Department Warns U.S. Will Reach Debt Limit Soon

Bush Sets Record on Deficit: According to a chart released by Reuters last week, this year's $304 billion deficit that arose under the Bush Administration's watch is the largest in the last 30 years. Though many economists agree that temporary deficits at a time of a slowed economy are beneficial, most are concerned that the permanent commitment of the country's vital resources to providing permanent and costly tax cuts to the very wealthy will only create more trouble for the economy in the long-run. The Treasury Department issued a warning last week that the federal government would soon reach its current borrowing limit of $6.4 trillion, if Congressional action were not taken to raise it. As reported in the June 24 edition of the Watcher, this announcement regularly sets up a struggle between the Administration and Members of Congress, who do not want to appear to be spending beyond the government’s debt limit. As this Washington Post article points out, this most recent announcement is particularly troublesome, given that the President is also requesting a $674 billion tax cut.

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Program Assessment And Budget Cuts Ahead

This Administration has not made reducing the size and effectiveness of government a stated goal; however, the strides that are being made to devolve responsibilities to the states and to privatize government functions, deregulate and limit government oversight, and defund government by reducing federal (and often state) revenue through huge tax cuts, make the words unnecessary. One new and potentially effective tool in this effort to delimit the role of the federal government is the “Program Assessment Rating Tool,” or “PART.”

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U.S. Treasury Releases FY 2002 Deficit Numbers

On Friday, October 25, Treasury Secretary Paul O’Neill and Office of Management and Budget (OMB) Director Mitchell Daniels released the Treasury Department’s summary of the budget results for fiscal year 2002, which ended September 30. According to this report, FY 2002 closed with a $159 billion deficit -- $2 billion larger than the $157 billion the Congressional Budget Office (CBO) predicted in its Monthly Review earlier this month.

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President Signs Debt Ceiling Increase Bill

On June 28, after much public and bipartisan hand-wringing, the President quietly signed a $450 billion increase to the debt limit, and thereby allowed the federal government to continue to sell Treasury bonds to help finance its current spending needs. Treasury Secretary Paul O’Neill had warned that without this increase, the U.S. would have to default on its debts for the first time in its history.

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Bumping Our Heads Against the Debt Ceiling

On June 28, the day Congress is planning to leave for the July 4 recess, Treasury Secretary Paul O’Neill has warned that the government will run out of money to pay its bills unless Congress increases the limit on how much the Treasury can borrow. This means parts of government, if not all of it, will no longer properly function, and government will default on its bills. This has been publicly described as a showdown between the Bush administration and Congress, but in fact it is really a showdown between Bush and the Republicans in the House.

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