For many of us concerned with the direction the Congress appeared to be heading, there was good news today. The House first removed from the Budget Reconciliation Bill the provision permitting drilling in the Arctic National Wildlife Refuge. Twenty-two Republican representatives published a letter indicating that they could not support the bill if Arctic drilling were included. Of course, those of us who find solace in simply knowing that the wilderness exists cannot rest on our laurels--the House and Senate negotiations could ultimately include drilling in the final bill (it is currently a part of the bill the Senate passed). You can read more about the decision to remove Arctic drilling, and the discussions of the other budget items, here.
The second piece of good news relates to the rest of the Budget Reconciliation Bill. The House leadership called off the vote altogether as they try to regroup to see what can be salvaged from their "take from one hand (the middle class and poor) and give to another (the wealthy)" version of balancing (sort of) the budget. The House had planned about $50 billion of cuts to many programs that are important to those without much wealth--medicaid, medicare, food stamps, low-income housing, and student loans.
In exchange, the House planned to extend the rate cut on capital gains and dividends that is currently set to expire in 2008, along with other tax cuts that would add up to about $70 billion. The capital gains cut in particular primarily benefits the very wealthy in the upper quintile of the income distribution. So the misnamed "deficit reduction package" might better be called a "deficit increase and fairness reduction package".
[Aside: Some tax cut and spend enthusiasts have argued that we can "grow" ourselves out of the huge annual deficit situation we find ourselves in. The argument is that tax cuts lead to greater investment and productivity, which lead to increased tax revenues without any sacrifice at all. The small drop in our deficit for 2005 ("only" $317 billion) from larger tax collections than originally expected doesn't substantiate that claim, however. Revenue levels are still quite low by historical standards, and they are not backed by a surge in economic growth. Instead, the higher revenues in 2005 are notable only because of the severely depressed revenues of 2001-2004: they are nowhere near the levels projected connected with the 2001 tax cut. What little surge there is may be attributable to expected expirations of tax cuts and a slight temporary bump up in the stock market in 2004. For a description of these factors and more, see an October 6 article by Richard Kogan and Isaac Shapiro at the Center on Budget and Policy Priorities. ]
Thankfully, at least some members of the House realized today that this tradeoff between aid for the poor and tax cuts for the rich is unconscionable. Not able to arm-twist the votes to pass their "deficit increase and fairness reduction package," the leadership pulled the vote til next week.
Let us hope that this group of more moderate representatives have the courage to stay the course. They should turn this budget deliberation into a reasonable discussion of the ways to (i) help the poor and middle class maintain a decent standard of living in a world where health care costs are skyrocketing, (ii) tax the rich fairly in a world where the rich are more powerful than ever, and (iii) pay for the necessary costs of government in the twenty-first century of the world's only superpower.
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