Bush to use momentum to advance tax plans
Friday, November 5, 2004 11:23:08 PM
afxpress.com
WASHINGTON (AFX) -- President Bush's vow to spend the political capital he accrued in his election victory this past week will likely translate into quick action to extend tax cuts, with Republican lawmakers ready to move as soon as the 109th Congress convenes in January
That effort will be made somewhat easier by the GOP's net gain of four seats in the Senate Tuesday, where a narrow 51-49 Republican edge had thwarted many of Bush's key legislative efforts
But Republicans not only made a net gain, they also claimed the scalp of Senate Minority Leader Tom Daschle of South Dakota, who fell to former Rep. John Thune.Tax-cut advocates say that should further energize already emboldened Republicans
"One of the reasons we were so keen on spending so much money to defeat Daschle is we really felt that if we could take the other team's general out we can march over them," said Stephen Moore, head of the Club for Growth, a Republican PAC that donated to Thune and several other successful GOP candidates
"I think we've got a good chance in the first six to nine months of this new administration to really accomplish a lot," Moore said
Sen. Charles Grassley, R-Iowa, the chairman of the tax-writing Senate Finance Committee, welcomed the election results and pledged to move quickly on efforts to extend expiring tax cuts
"We should look for as much permanence of previously enacted tax relief measures as possible. Taxpayers should see no lapse in tax relief. Continued economic growth depends on that," Grassley said, in a written statement outlining the panel's goals
Grassley specifically cited the need to extend tax cuts set to expire at the end of 2005, including college tuition deductibility and the low-income savers' credit
But Republican ambitions reach beyond that. The White House and GOP lawmakers have long expressed a strong desire to make permanent almost all the tax cuts signed into law by Bush in 2001 and 2003
All provisions of those tax-cut packages are set to expire by 2011 and 2013, respectively. Senate budget rules effectively required the tax cut packages to expire or "sunset" after 10 years. But some provisions expire even earlier, a move that helped mask the long-term impact of the overall tax cuts on revenues, even though proponents fully expected to see the measures eventually made permanent. Provisions cutting the capital gains and dividend tax rates to 15 percent each, for example, are set to expire at the end of 2007. If Congress doesn't act by then, the capital gains rate would return to 20 percent and dividends would again be taxed at top personal income tax rates
The Center on Budget and Policy Priorities, a liberal think tank, has estimated that permanent extension of the 2001 and 2003 tax cuts would cut revenues by around $2.2 trillion over the next 10 years, including the costs of higher interest payments on the national debt
Deficit hawks contend such calculations undermine Bush's claim that he'll cut the budget deficit in half over the next five years, noting that budget impact of extending the bulk of the tax cuts will take place after the five-year window
They've called for reinstituting budget rules that would require tax cuts or increases in mandatory spending programs to be offset and rendered budget-neutral. The Bush administration and GOP leaders have rejected such calls, insisting that such "pay-as-you-go," or PAYGO, rules should apply only to spending increases
Nevertheless, critics of Bush's fiscal record doubt that deficit concerns will slow the momentum for extending tax cuts without offsets
The mounting deficit, which hit a record in dollar terms of $413 billion in fiscal 2004, "wasn't an issue in the first term. It certainly isn't going to be an issue in the second term, and it certainly wasn't an issue in the campaign," said Stanley Collender, a veteran budget analyst with Financial Dynamics
Collender predicted Bush and the GOP Congress would see the next four years as the best opportunity to enact as many tax cuts as possible. An obstacle would arise only if there is some sort of financial crisis, such as a sudden flight out of U.S. assets, which is directly tied to concerns about the mounting tide of red ink, he said
Bush, in Thursday's news conference, appeared to quash any notions that his pledge to reform and simplify the tax code would be used in an effort at deficit reduction
Bush said tax reform efforts would be "revenue-neutral," and specifically ruled out using simplification to "sneak a tax increase on the people." Bush said he would also seek to ensure that any reform effort "rewards risk and doesn't have unnecessary penalties." Republican advocates say Bush can't ignore the deficit. The red ink makes extending the tax cuts, reforming the tax code and efforts to reform Social Security more difficult and underline the need for the president to focus on reining in spending, Moore said
Bush and Republican leaders have routinely dismissed the role of the tax cuts in adding to the deficit, arguing that "spending discipline" is the key to holding back red ink
But skeptics note Bush has resisted efforts to scale back increased spending on homeland security and defense. Bush also advocated and last year signed legislation adding a massive drug benefit to Medicare. He also wants to reform Social Security in a way that would allow younger workers to put a portion of their payroll taxes into personal accounts, which would carry transition costs of up to $2 trillion. Social Security reform "is going to be hard work ... and there are going to be costs. But the cost of doing nothing is more significant," Bush said in Wednesday's news conference
fxstreet.com
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Social security Transition costs of $2 Trillion, who cares?
$413 Billion 2004 budget deficit, who cares?
Paygo, who cares?
$100B a year for Iraq, who cares?
Extending tax cuts will cost $2.2 Trillion, who cares?
Mandate for more pork barrel giveaways, cost unknown, who cares?
Increased homeland security costs off budget, who cares
San Diego and California bankrupt, who cares?
Homeland security costs shifted to states with no means to pay, who cares?
Interest on national debt will eventually exceed total revenues, who cares?
Complete fiscal irresponsibility, who cares?
Is there a republican anywhere that cares about any of this?
Where?
At any rate, who else cares if they do?
School prayer? Now that's something to care about!
Mish |
