“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.
Making the Pitch – With much of Washington eagerly anticipating the debut of Stephen Strasburg on the mound tomorrow, the return of Congress this week is an afterthought to many. But Pelosi, Reid and the rest of the Congressional rotation will need to have some pretty good stuff when they take the mound on Capitol Hill and face an opposing legislative line-up. They will have to show a lot of range as they pitch both economic stimulus and fiscal responsibility.
We at CRFB believe in the Wizard of Oz theory of deficit reduction. Passing the right package of spending cuts and tax increases requires a brain – so that we stabilize our debt in the most economically efficient way; a heart – so that we are focused on the real human consequences of our decisions; and most importantly, courage (“the nerve”).
The House today passed a one-year extension of various tax breaks as well as expanded unemployment benefits until November on a 215-204 vote. In a separate 245-171 vote it approved a patch to the Medicare “doc fix” through 2011. However, the Senate adjourned without considering the legislation, meaning that the unemployment benefits, doc fix and COBRA subsidies will expire while Congress is in recess. Marking the second time this year Congress has left town without extending these provisions.
Two massive spending bills that congressional leaders wanted to dispose of before hitting the road for Memorial Day have hit potholes as lawmakers grow more uneasy about deficit spending. However, proposals to assert some degree of fiscal responsibility have yet to leave the driveway.
The extenders bill the House is considering would cost $190 billion between 2010-2020. Only $56 billion of that would be offset.
Emergency designations and PAYGO loopholes aside, we think more (like all) of the bill should be paid for, a belief that seems hard to argue against when staring at a mountain of $8.5 trillion in debt. (If you want to visualize that mountain, picture $100 bills stacked 5,695 miles high.)
So far the offsets in the House bill include:
A few months back, we discussed a comprehensive proposal by Senators Ron Wyden (D-OR) and Judd Gregg (R-NH), the Bipartisan Tax Fairness and Simplification Act of 2010. Wyden-Gregg would, as its name indicates, simplify the tax system in many ways. It would reduce the number of income tax brackets from six to three, with rates of 15, 25, and 35 percent.
CBO and JCT have released updated cost estimates of the most recent version of the American Jobs and Closing Tax Loopholes Act (H.R. 4213), a bill that is scheduled to be brought to the House floor tomorrow. The bill would cost about $190 billion over the 2010-2020 period, only 30% of which would be paid for (meaning the bill will increase the deficit by $134 billion).