Medicare Drug Benefit: Delay Tax Cuts
This vote was on an amendment offered by Sen. Jay Rockefeller (D-W.V.) to tax reduction legislation. The amendment would have delayed the reduction of the top income tax rate for individuals until a Medicare prescription drug benefit is enacted. The amendment failed and the tax cut was enacted, at a cost of $1.35 trillion over 11 years (likely to be $1.8 trillion when provisions are fully implemented in later years). This left the nation without the resources it needs to meet urgent domestic priorities, such as a prescription drug benefit in Medicare. Failed 48 Yea to 51 Nay.
September 19, 2005
SHOULD IMPENDING UPPER-INCOME TAX CUTS BE IMPLEMENTED WHILE KATRINA
COSTS MOUNT AND OTHER DOMESTIC PROGRAMS MAY BE CUT?
By Robert Greenstein, Joel Friedman, and Isaac Shapiro
Even before Hurricane Katrina, large deficits were projected far into the future, with the nation’s debt burden ultimately swelling to unsustainable levels. The relief and recovery from Hurricane Katrina is estimated to cost $100 billion to $200 billion, adding to the nation’s mounting debt. Debate has now begun about whether in the face of these costs and the grim long-term fiscal outlook, some belt-tightening and “shared sacrifice” are in order.
The budget reconciliation bills that Congress is slated to consider this fall will not help. Taken together, the two bills will increase deficits by more than $35 billion over five years. Under these bills, $35 billion in cuts in programs such as Medicaid and food stamps will be used not to reduce the deficit, but to offset a portion of the $70 billion that the reconciliation tax-cut bill will cost.
On September 16, President Bush said further budget cuts will be needed. The Administration presumably intends these cuts to come primarily in domestic programs. One obvious step, however, is being overlooked: Two tax cuts enacted in 2001 that are not yet in effect — and will only start taking effect on January 1 — could be reconsidered as a way of helping to defray some of the costs of Katrina relief and recovery. These two tax cuts will benefit only high-income households (primarily millionaires), will do little for the economy beyond further increasing the deficit, and were not even requested by President Bush in the first place. (They were added by Congress.)
The highly respected Urban Institute-Brookings Institution Tax Policy Center reports that households with incomes of more than $1 million a year — the richest 0.2 percent of the U.S. population — already are receiving tax cuts averaging $103,000 this year, before these two new tax cuts take effect. The Tax Policy Center finds that the two tax-cut measures in question will give these “millionaires” nearly another $20,000 a year in tax cuts, when the measures are phased in fully.
This raises the question of whether the nation should proceed with these tax cuts at a time when many Katrina survivors remain in difficult straits, when huge sums are being discussed for Katrina relief and recovery, and when cuts in domestic programs — including programs for the poor — are slated for Congressional consideration this fall as part of the reconciliation bills.
Read the rest of the story. It has charts and graphs, ohhhh. http://www.hodesforcongress.com/twostep.php