Economic Recovery Measures
Summertime, but the Living Isn’t Easy in Congress – Today brings the first official day of summer, but Washington has already been experiencing searing days and the Capitol dome is about to blow off from the heat inside. The longest day of the year comes as lawmakers face a long road on appropriations and taxes, not to mention the never-ending “extenders” bill, which still has no end in sight.
Legislation to extend tax breaks that expired last year, as well as expanded social safety net provisions and relief for doctors from a steep cut in Medicare payments, continues to languish in the Senate as lawmakers cannot agree on paying for the costs of the bill.
With much of the nation's attention focused on President Obama's oil spill address and much of the fiscal policy universe focused on the extenders bill, another bill was passed by the House on Tuesday. The Small Business Jobs Tax Relief Act of 2010 (H.R. 5486) provides, as you would expect, a number of small business tax breaks, although the gross cost is expected to be very small (less than $4 billion).
The Senate released yet another version of the tax extenders and social safety net bill (The American Jobs and Closing Tax Loopholes Act of 2010 - H.R. 4213), decreasing the gross cost of the bill from $137 billion to $118 billion. CBO has yet to release an updated cost estimate of the bill, but press accounts report that the bill's overall deficit impact is likely between $50 and $60 billion.
The Wall Street Journal points out that deficit aversion is coming to Washington at a bad time. Just as lawmakers are looking to provide an extra kick to the economic recovery, a growing number of them have become concerned about adding to the deficit. As the article states, President Obama has been forced into "arguing...that spending be increased and cut at the same time," and Congress has been reluctant to move on the extenders bill.
The Senate will seek an end to the extended debate over tax extenders legislation tomorrow with a cloture vote on HR 4213 even though it is not clear that the bill has the 60 votes necessary to cut off debate and move to a vote on final passage. Concerns about the cost of the package, much of which is not paid for, is the main point of contention.
“Beautiful Game”and Not-So-Pretty Agenda – Add soccer to all the other distractions in Washington as lawmakers face a packed agenda. With the World Cup under way and workers gathered around monitors in offices across the globe (when they’re not at the local bar), legislators in DC face action on key bills that will affect the nation’s bottom line. Meanwhile, the growing chorus for fiscal responsibility and offsets to spending are becoming as loud and ubiquitous as the sound of the vuvuzela at matches.
Start with a basic question: Do you think politicians are better at cutting taxes and increasing spending, or the reverse? The answer should help you to determine whether to worry more about politicians doing too little to stimulate the economy or too little to control the debt.
Lawmakers have railed against the inability to stop the leaking of oil into the Gulf of Mexico, yet they are having no better success in staunching the flow of red ink. Congress needs its own containment cap to suppress spending and tax cuts that are deficit-financed.