A Catch-Up Post
July 1st, 2008 . by economistmomI can’t let some of the federal-budget-related events of the past week, which I missed by being on vacation, go unnoticed here on EconomistMom.com. So today I’m playing catch up.
First, you gotta hand it to those House Democrats, who keep proposing and passing fiscally-responsible (pay-go compliant) tax cuts. Last week the Ways and Means Committee reported, and the full House passed, H.R. 6275, a revenue-neutral extension of Alternative Minimum Tax relief for the current (2008) tax year, with more than half of the $61.5 billion cost paid for with the highly controversial “carried interest” provision. Such a strategy failed last year–multiple times, and ultimately–when the Senate refused to go along with the various revenue offsets in the various versions of AMT bills that came before them, and no one expects it to go any other way this year. Even with the House Democrats taking a firm stand in insisting that the ”tax extenders” bill (H.R. 6049, which passed the House in May) must be deficit-neutral (see this letter to the Senate), they have not been nearly so strong in their talk about the AMT bill. (Why the Senate won’t pay for those other extenders, I still don’t understand.)
And in more news portending rising budget deficits, the President yesterday signed a $186.5 billion supplemental spending bill (H.R. 2642), which includes $161.8 billion to fund war operations through next June. This was the bill that also includes veterans’ educational benefits that the Blue Dog Democrats had hoped to pay for, but again lost out on. (By the way, once it became clear that no one else would go along with paying for these new veterans’ benefits, the cost of the plan only grew–by more than $10 billion to almost $63 billion over ten years.)
And while I was goofing off on vacation, my boss, Bob Bixby, was really busy. He testified before a Senate subcommittee, and got ready for a Milwaukee installment of the Fiscal Wake-Up Tour (yesterday). I’ll highlight some of his testimony later this week in a post that will get just a bit more specific about Social Security (given some pretty intense discussions here in the past week in response to my “young people get it” post), while revisiting some of that basic budget math I talked about in the first few days of this blog.
I was impressed to see that Bill Gross from PIMCO, a larg specialty fixed income fund, wrote an open letter to `President Obama` predicting a trillion dollare deficit. I had expected that it would reflect the expanding deficits that will be produced by expenditures on Medicare, Medicaid and Social Security.
Instead, he added $500 billion in new government spending along with a $500 deficit to come up with the trillion.
Here is the link. http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+July+2008.htm
I would be interested in reading your reaction to Bill Gross’s “letter.”
MG: Thanks for the suggestion (and thanks to John for the link)… I’ll try to digest it and comment on it sometime this week. It’s very intriguing.
You know what else passed in the House and now almost through the Senate? The Mortgage Bailout Bill, which will increase the deficit by $22 Billion Dollars. And of course, the Blue Dog Democrats almost to a man voted FOR this Bill. Why? They claim to be fiscally responsible. Yet they all vote for this. Call them here and tell them that when it comes again for a vote in the House, vote against it!
http://www.freedomworks.org/newsroom/press_template.php?press_id=2580