The House and Senate voted (Thursday and Friday, respectively) on budget resolutions: H Con Res 312 and S Con Res 70. See this New York Times story. These are not binding, but give some sense of the direction that spending and tax bills may take as discussions progress--a "policy manifesto", as the Times article points out.
For the House Committee on the Budget description of FY 2009 budget and discussions, see this link.
So what policies are manifest here? The Senate extended the $1000 child tax credit by a vote of 99-1, but thankfully defeated a move --although only 47-52--by Sen. Graham to make permanent the low capital gains rates (and dividends rates) of the Bush cuts for the wealthy. Both would either let the tax cuts for the wealthy expire or pay for them with offsets elsewhere. The House would pay for any AMT action with offsets, while the Senate is adopting an attitude of "gotta do it, no matter what the cost." (As readers know, this AMT approach is silly. The Senate should quit thinking of people who earn more than $200,000 as being middle class, since they are clearly not but rather in the very top privileged elite. We don't have to protect anyone but those earning under $80,000 from the reach of the AMT.)
Regretably, the House didn't support an amendment offered by Caroly Kilpatrick of Michigan, which would have repealed the 2001-2003 tax cuts for those making more than $200,000 while also cutting back on various of the provisions that have handed corporations a low or zero effective tax rate. (No Republicans voted for it.)
While McCain disingenously suggested that not making permanent all of the Bush tax cuts that benefited the wealthy would be a tax increase and would keep food off families' tables, Candidate Obama's comment went to the point:
"The notion that we would pile up more mounds of debt, literally borrowing hundreds of billions of dollars to pay for tax breaks for people who don't need them and weren't even asking for them I think is unfortunate," he told reporters Thursday. "I think it's an example of the kinds of flawed fiscal policies that have gotten us in such a hole under this administration and a Republican Congress." Id.
Not renewing the Bush tax cuts for the wealthiest families in America is not a tax increase, folks. The tax code is replete with various temporary provisions. The reason they are temporary is that the enactors are not sure whether it is wise to make them permanent--they may serve a short-term purpose, but they may be harmful in the long term. The logic for the original Bush tax cuts was that the country had a surplus and instead of paying off debt, the surplus would be "returned" to the taxpayers. By the time it was enacted, there was no prospect of a surplus, and the logic became a stimulus to growth. The enactors knew that the price of permanent enactment of the cuts was too high and couldn't be logically supported. Of course, if you believe the fallacy of the Laffer Curve, then all tax cuts raise money. But that is nonsense, and members of Congress know it is nonsense.
If we want to fund this country's priorities and the many needed repairs to public infrastructure and human capital needs, we must have sufficient funds. We have and will spend enormous sums on Iraq:renowned economist Joseph Stiglitz and his co-author Linda Bilmes now estimate that we are funding a $3 trillion dollar war. All the while, the dollar is going down, oil is heading up and up, and our country's debt is similarly in the stratospheres at $9 trillion or so (with our individual shares being about $30,000!). It simply makes no sense to continue borrowing money to forego needed domestic programs in order to fund a tax cut for the privileged wealthy in this country who can easily afford to pay taxes at the rate they were paying in 2000.
That goes double for the continuing Republican effort to repeal (or eviscerate so it will be easier to repeal later) the estate tax. The New York Times editorial page for March 13 described the Republican effort in the Senate as "new hope for the rich." While Americans are getting poorer, with home equity falling and typical household income, adjusted for inflation, below its 2001 peak, the Republicans want to eliminate the estate tax that in 2009 will only tax couples with more than $7 million! That's already too large an exemption and shouldn't be retained at that amount.
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