October 25, 2014

Posts on tax policy

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Monday, July 19, 2010 - 10:34 AM

Below are several developments we have been following since the last edition of the Washington Budget Report (sign up here) was published. 

2011 APPROPRIATIONS PROCESS MOVES FORWARD AS TIME STANDS STILL FOR THE 2010 SUPPLEMENTAL: Last week the House Appropriations Committee continued to make progress on the FY 2011 bills. House subcommittees reported the Military Construction and Veterans Affairs; Energy and Water; and...

Thursday, June 24, 2010 - 10:00 AM

A Washington Post editorial today sums up a bunch of different strands of thinking about the federal budget that Concord has been writing about and talking about a lot recently. One is that the country can "walk and chew gum" at the same time when it comes to short-term actions to help the economy that may involve increased deficits and long-term planning to confront the nation's real fiscal challenges. Another is that the current debate in Congress over the cost of tax-extenders is failing to focus on their merits while the overall fiscal challenge continues to go unexamined. A third is that we generally do know what actions need to be taken to reform federal programs over the long run -- but that members of Congress lack the political courage to act, and hopefully the President's fiscal commission can begin to...

Wednesday, June 16, 2010 - 1:23 PM

Debate on the so-called “extenders” bill has focused on the size and duration of unemployment benefits, health insurance assistance for those who recently lost their jobs, Medicare physician payments, state aid for health care and various offsets to mitigate the overall effect on the deficit.

Conspicuously missing from the debate is any scrutiny of the extenders themselves. It’s a missed opportunity to raise needed revenue while simplifying the tax code and broadening the tax base -- goals that economists of all ideological stripes have long advocated. 

Both the House and Senate versions of the extenders bill contain more than 60 narrowly targeted tax breaks that expired last year. Extending them just through this year will cost about $32 billion. The long-term cost runs to over $350 billion. That cost will add to the debt unless it is offset by corresponding tax increases or spending cuts that may prove more harmful to the economy than failing to renew some, or all, of the extenders. 

At a time when the President is commendably urging all federal agencies to identify their lowest priority and least effective items, Congress should devote the same level of scrutiny to the tax code. The extenders would be a good place to...

Monday, June 7, 2010 - 4:34 PM

Public concern about the nation’s rising debt burden is beginning to have an impact on the legislative agenda.  

That much was evident as the House passed a scaled back “extenders” bill (H.R. 4213) on May 28 by a slim margin. Originally estimated to have a gross cost of $192 billion and a net deficit increase of $134 billion, the final bill carried a gross cost of $114 billion and a net deficit increase of $54 billion.

While this cost reduction was a victory for House Democrats -- mainly Blue Dogs -- who objected to the deficit impact of the original bill, much of it was accomplished by timing shifts rather than a change in policy. For example, shortening the extension period of certain unemployment benefits “saved” about $8 billion and sunsetting an increase in the Medicare physician reimbursement rate (the “doc fix”) after 19 months “saved” almost $40 billion. 

It remains to be seen whether concerns about the immediate deficit, which is largely driven by economic conditions, will be translated into hard choices on the long-term structural deficit. 

In that regard, it is worth noting that the policies extended in the extenders bill carry large long-term costs whether they become visible now or in the...

Thursday, June 3, 2010 - 4:35 PM

Below are a few budget items we have been following, since the last edition of the Washington Budget Report (sign up here) was published.

  • Last week, the House Appropriations Committee postponed its mark-up of the FY 2010 war supplemental.  The committee's chairman, David Obey, released a proposal including $84 billion in supplemental funding.  In addition to funding the President's request for war funding, the proposal would...
Monday, May 10, 2010 - 3:08 PM

 

recent story on CNN-Money by Steve Hargreaves asks “What will BP really pay?” I think a more fundamental question to ask at this point is “What should BP pay? And should no one else?” As the story explains (emphasis added):

NEW YORK (CNNMoney.com) — The Gulf oil spill is going to cost billions to clean up, a tab BP has publicly pledged to pay in full.

But thanks to the unpredictable nature of the oil slick and the legal maze surrounding maritime law, what BP will pay and to whom is very much an open question…

Start with the costs. Estimates to clean the spill and compensate other parties for the economic damage run from $2 billion to $14 billion. One politician even said it could run into the hundreds of billions

…which is a lot of money, too much for even BP to cover (whose profits were, coincidentally,...

Sunday, April 11, 2010 - 9:45 PM

I have never been a fan of the Bush tax cuts. I’ve always felt they were too costly, too skewed to the rich, and did too little to make the tax system more efficient. Concord also warned about the 2001 and 2003 tax cuts before they were enacted and has since continuously said they should not be extended without a plan to address the nation's unsustainable fiscal outlook.

The expiration of the cuts, at the end of this year, is fast approaching and policymakers in Washington are struggling to decide what to do with them. President Obama has promised to continue most of the same tax cuts that he himself has criticized for being fiscally irresponsible. Not only has he promised to extend the tax cuts for all households with incomes below $250,000 (at a budgetary cost of $2.2 trillion over ten years), but he also promised to never raise any taxes on households below that income.

However, President Obama has also promised to get the deficit down to a "sustainable" level of around 3 percent of GDP in five years. But the President's own budget, which includes the deficit-financed extension of those "middle-class" Bush tax cuts (that $2.2 trillion worth), isn't consistent with such a low deficit. CBO says that under the...

Wednesday, February 17, 2010 - 9:39 PM

With today being the one-year anniversary of the American Recovery and Reinvestment Act of 2009 (more commonly referred to as “the stimulus”), and President Obama expected tomorrow to announce his Presidential commission for deficit reduction, I’m hearing a lot of claims and rhetoric about what has “worked” versus what has not, and what has to be done going forward versus what should remain “off limits.”

In all these arguments and politically-colored “evaluations”, I hear misplaced focus on (the stark and easy-to-talk-about) absolutes, averages, and aggregates, when what matters economically are relatives, marginals, and individuals.

Let me elaborate a bit with the two issues at hand…

On the Stimulus: Republican critics of the stimulus argue that the “proof” that the stimulus hasn’t worked lies in the still-bad numbers of the unemployed–-that since ARRA’s passage last year, total jobs in the economy have decreased, not increased.  As the New York Times’...

Wednesday, January 20, 2010 - 2:57 AM

"It isn't fiscally irresponsible to raise the debt limit, I think it would be rather irresponsible not to raise the debt limit because we have already incurred the bill."

That quote, from Concord executive director Bob Bixby, is one of many from our new videos highlighting some of the key points driving fiscal discussions in Washington.

We recorded the videos because the Senate is set to begin debate on increasing the debt ceiling while all of Congress awaits the President's budget proposal, which will purportedly contain the Administration's ideas for how to reduce the country's budget deficits. 

The first shows a discussion about the basics behind increasing the debt limit and how there are a few key budget process reforms tied to fiscal responsibility that have become part of the debate as the Senate approaches a difficult vote. We talk about the possible Senate amendments...

Tuesday, January 19, 2010 - 6:52 PM

It’s a little amusing to see how badly the idea of a bipartisan fiscal commission has frightened some partisans at both ends of the political spectrum. That alone indicates the idea may have merit.

Some skeptics, of course, doubt that a special bipartisan panel would have any hope of success in steering the government onto a more responsible fiscal course. And there’s no question that this would be a very tough assignment.

But the strident opposition to a bipartisan commission from some critics on both the right and the left is rooted in fears that such a panel might actually succeed. They describe commission proposals in conspiratorial terms, as though serious bipartisan planning for the nation’s future would be merely a cover for shady plots to sneak reprehensible policies past Congress and the American public. Oh, the deceit of it all...

The Wall Street Journal, for example, recently ran an editorial conceding that “current federal commitments are unsustainable, starting with $37 trillion in unfunded Medicare liabilities.”

Yet the editorial ruled out a bipartisan commission that could tackle this...