As the president was giving his press conference last night, the Congress was passing their budget… and nobody asked the president about it?
“Mr. president, when more and more people are becoming uninsured and health care cost skyrocketing, how can you support congress cutting Medicaid spending by $10 billion? … You talk about helping the poor in your social security plan, why then do you support cutting food stamps? … At a time of greatly increasing tuition costs, how do you justify cutting back on funding for student loans? … At a time of massive deficits, how can you justify passing over $100 billion more in revenue cuts? … do you think it is fair to pass additional hundreds of billions of dollars of debt to future generations? … Is the $300 billion we’ve spent in Iraq causing us to short-change domestic priorities? … etc. etc. etc.
Budget Deal Sets Stage for Arctic Drilling And Tax Cuts
Congress passed a five-year, $14 trillion budget last night that will pave the way for oil drilling in parts of an Alaskan wildlife refuge, a new round of tax cuts and the first curbs on entitlements for the poor in nearly a decade.
The House approved the plan by a vote of 214 to 211, and the Senate voted 52 to 47.
Under the hard-fought agreement, the federal deficit, which reached a record $412 billion in 2004, would fall to $383 billion in 2006 and $211 billion by 2010. Congress would be expected to shave $35 billion off the growth of entitlement programs through 2010, the first such savings since the 1997 balanced budget agreement.
Nearly a third of that total would come from Medicaid, the primary federal and state health program for the poor. At the same time, the budget makes room for $106 billion of tax cuts over five years, $70 billion of which would be protected from a Senate filibuster.
Assessing the Conference Agreement on the Budget Resolution
House and Senate Republican conferees have reached agreement on a Congressional budget resolution for fiscal year 2006. The conference agreement calls for significant cuts in domestic programs — both entitlement and annually appropriated (so-called discretionary) programs — over the next five years. But because the conference agreement also calls for substantial new tax cuts and increases in funding for defense and international programs, the budget resolution would increase deficits over the next five years by $168 billion, compared with the deficits the Congressional Budget Office estimates would occur if there were no changes in policies.
The conference agreement includes:
Tax cuts, featuring more cuts in taxes for high-income individuals. The budget agreement includes tax cuts totaling $106 billion over five years, with $70 billion to be achieved through the fast-track reconciliation process. These tax cuts are widely expected to include extension of the capital gains and dividend tax cuts, which primarily benefit people at high income levels.
Entitlement cuts, with a substantial share likely to come from low-income programs. The budget features cuts in entitlement and other mandatory programs totaling $30.5 billion over five years, with $34.7 billion of the cuts to be included in a reconciliation bill and $4.2 billion in entitlement increases that would occur outside of reconciliation. That bill would include significant reductions in low-income programs — $10 billion in reductions in Medicaid, plus cuts in the Food Stamp Program.
Domestic Discretionary Cuts. The cuts in funding for annually appropriated (discretionary) domestic programs — the part of the budget that includes education, veteran’s health care, environmental protection, housing, and many other program areas —total $212 billion over five years. (This amount refers to the level of cuts below the 2005 funding levels, adjusted for inflation.) This reduction in funding would reduce expenditures — or outlays — on domestic discretionary programs by $143 billion over five years.
In 2006, funding for domestic discretionary programs would be reduced by $23 billion, or 5.9 percent, in real terms. The cut would grow to $59 billion, or 13.5 percent, in 2010. (Since most homeland security programs are included in the domestic category and the new budget assumes increases for those programs, other domestic programs would have to be cut by more than the amounts cited here.)
Defense and International Increases. Funding for defense and international discretionary programs would be increased by $186 billion over five years, with most of the increase going to defense. This additional funding (plus the 2005 supplemental appropriation for Iraq and Afghanistan that is now in conference) increase expenditures over the CBO baseline by $199 billion over five years.
Increased Deficits. Including the $36 billion increase in interest payments on the debt that would result from these policy changes, the deficit would be $168 billion higher than the level that CBO projects will occur if no changes in policy are made.
The conference agreement on the budget resolution is a clear demonstration of the priorities of the Congressional leadership, with significant tax cuts, especially for wealthy investors, coming at the expense both of domestic programs — many of which serve vulnerable, low-income people — and of increases in the deficit.
Effect of the Conference Budget Plan on Projected Deficits
Cumulative deficit increases (+) or reductions
(-) relative to CBO’s March baseline projection
over the five-year period 2006-2010, in billions of dollars Cost of tax cuts. +106.2
Reductions in entitlement benefits. -30.5
Expenditure reductions from $212 billion reduction in funding (i.e., appropriations) for domestic discretionary programs. -143.0
Expenditure increases for defense and international discretionary programs. +198.7
Increased interest costs resulting from above policies. +36.0
TOTAL increase in projected deficits. +167.5
Filed under: Economics
It looks like the budget resolution might be out of conference and on the floor in the House/ Senate on Thursday/Friday. They are reportedly still working out some of the details, but it looks like they may have reached a deal. The budget reportedly includes $70 billion in tax cuts protected under reconciliation, and $40.5 billion in savings from mandatory programs.
- The House voted yesterday overwhelmingly (348-72) to instruct the conference to remove Medicaid cuts.
- Before passage, the Senate passed 52-48 an amendment to remove Medicaid cuts.
(See this article)
However, the last I have heard the conference agreement will still include $10 billion in Medicaid cuts.
We have a calculator here which will determine the state impact based on various federal cuts (this is also the webpage with the full analysis.)
For more: Worse Than No Budget
[Update: Looks like there may be a final sticking point on the Medicaid cuts, unclear what the outcome will be.]
Filed under: Economy
Those that benefited the most from Bush’s tax policy are now having second thoughts…
Affluent growing more concerned about nation’s economy – Apr. 25, 2005
Rich folks feel less secure
Survey: Most affluent believe there’s a real estate bubble; sharp drop in those seeing stock gains.
April 25, 2005: 10:57 AM EDT
NEW YORK (CNN/Money) – A survey finds affluent Americans growing more concerned about the state of the economy.
There has been a sharp drop among those surveyed who expect further gains for the S&P 500, and a majority now believe there is a bubble in housing prices. A growing concern about the federal budget deficit now has a strong majority preferring deficit reduction to further tax cuts.
The quarterly survey also found the economy was cited as being on par with terrorism as a national concern for the first time in six quarters.
The survey was conducted by McDonald Financial Group of 400 affluent Americans with investable assets of $500,000 or more, and/or personal annual income of $150,000 or more. The late March/early April survey found that its overall consumer confidence index fell to 50, down 5 points, or 10 percent, from the 55 reading in early January.
The survey found growing concern about the federal budget deficit, with 85 percent of respondents viewing the deficit as a problem and 57 percent seeing it as a “very serious” problem. In fact, by better than a two to one margin the affluent Americans surveyed said they would prefer deficit reduction measures instead of tax cuts.
Filed under: Economics
April 20, 2005 • 10:15 am
WSJ.com – Economist Bloggers Make Prescriptions for Growth
Economic news has been confusing of late. Fed officials are signaling more concern about inflation, the stock market has been struggling and consumer confidence is down. But interest rates remain at historic lows and the housing market is barreling ahead, while volatile oil prices are weighing on both corporations and vacationers alike.
So, how healthy is the U.S. economy, really? Are we on the edge of a recession or a boom? Economist bloggers John Irons and Arnold Kling agreed to take the economy’s pulse, diagnose what (if anything) is ailing it, and write the necessary prescriptions.
Filed under: Economy
April 18, 2005 • 11:16 am
Looks like Bush and Cheney did did very well on their tax bill this year. Combined they saved over $100,000 as a result of recent tax changes.
Filed under: Economics
From: John Irons
Sent: Friday, April 08, 2005 11:31 AM
To: All Center
Subject: Einstein 100 years later
FYI – 2005 is the 100th anniversary of some of Einstein’s ground-breaking work: 1905 was a banner year for Einstein and all of physics. His 1905 work included papers on special relativity (including the famous E=mc^2 equation), some work on Brownian motion, and on black-box radiation which in part led to modern quantum mechanics (and a Nobel Prize).
There is a very good op-ed in the NY Times on this work, Einstein, and the cosmic implications of the quantum-level work (which Einstein never quite believed!)
Much of this work took years (or even decades) to fully develop and to gain widespread acceptance; but they did change how people think about the world in which we live.
As Keynes said back in ’36, “It is ideas, not vested interests, which are dangerous for good or evil.” And also: “ideas … both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.”
(Actually, the full quotation is from The General Theory of Employment, Interest and Money:
“But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, whom hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.”
You can see why economists love to quote this!)
John S. Irons, Ph.D.
Director of Tax and Budget Policy
Filed under: Policy
Wal-mart, famous for buying goods primarily from China, finally decides to by American.
This seems to be a pretty good return on investment…
USATODAY.com – Wal-Mart family lobbies for tax cuts
Led by Sam Walton’s only daughter, Alice, the family spent $3.2 million on lobbying, conservative causes and candidates for last year’s federal elections. That’s more than double what it spent in the previous two elections combined, public documents show.
The Waltons declined to discuss their political activities. But a USA TODAY review of public documents reveals a small-town Arkansas family emerging as a political juggernaut on tax issues, extending Wal-Mart’s influence over U.S. society even more.
The Walton support for Bush and other fiscal conservatives assumed new urgency last month when Wal-Mart sweetened its dividend — boosting Walton dividend income above $1 billion a year. Bush’s dividend tax cut, enacted two years ago and set to expire in 2009, will save the family as much as $51 million this year.
Filed under: Fiscal Policy
Science & Technology at Scientific American.com: Okay, We Give Up — We feel so ashamed
Good journalism values balance above all else. We owe it to our readers to present everybody’s ideas equally and not to ignore or discredit theories simply because they lack scientifically credible arguments or facts. Nor should we succumb to the easy mistake of thinking that scientists understand their fields better than, say, U.S. senators or best-selling novelists do. Indeed, if politicians or special-interest groups say things that seem untrue or misleading, our duty as journalists is to quote them without comment or contradiction. To do otherwise would be elitist and therefore wrong. In that spirit, we will end the practice of expressing our own views in this space: an editorial page is no place for opinions.
Get ready for a new Scientific American. No more discussions of how science should inform policy. If the government commits blindly to building an anti-ICBM defense system that can’t work as promised, that will waste tens of billions of taxpayers’ dollars and imperil national security, you won’t hear about it from us. If studies suggest that the administration’s antipollution measures would actually increase the dangerous particulates that people breathe during the next two decades, that’s not our concern. No more discussions of how policies affect science either-so what if the budget for the National Science Foundation is slashed? This magazine will be dedicated purely to science, fair and balanced science, and not just the science that scientists say is science. And it will start on April Fools’ Day.
Filed under: Education