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The Tax Policy Center’s Howard Gleckman astutely observes that the “jobs-creating, loophole-closing tax [extenders] bill does little of either.”   He notes the irony in claims that these temporary-but-perennial tax cuts (more formally referred to as the extension of “expiring tax provisions”) are fiscally responsible and good (even “essential”) for the economy:

The Joint Committee on Taxation estimates that extending the expiring provisions would reduce federal revenues by $32.5 billion over 10 years. But keep in mind these tax subsidies would all expire—on paper at least—over just a year or two. A more accurate 10-year estimate of the revenue loss (assuming the tax breaks eventually are continued throughout the decade) would likely approach $200 billion…

[W]hile nearly all of the cost of extending the 70 expiring provisions occurs in 2010 and 2011, 90 percent of the revenue to pay for these goodies would not be collected until 2012 and beyond. It isn’t hard to imagine that much of this money will never materialize, either because the law will be changed or because very smart lawyers will figure ways around it. The overall bill, including the new spending, would add about $140 billion to the deficit. It is hard to be too cynical about tax extenders that have reached a state of near-immortality. But the least Congress could do is to call this annual rite what it is: Continuing tax loopholes, not closing them.

And speaking of the deficit-financed extension of expiring tax cuts being twisted around and artistically re-characterized as “fiscally responsible,” let’s bring up my favorite issue–or more accurately, “peeve.”  I consider the “mother of all tax extenders” the proposed extension of most of the Bush (2001 and 2003) tax cuts, which is the single most costly deficit-financed policy proposed in President Obama’s budget.  This week the Pew Charitable Trusts issued a report (”Decision Time: The Fiscal Effects of Extending the 2001 and 2003 Tax Cuts”) that puts the cost of extending the Bush tax cuts in better perspective.  The report notes how the deficit-financed permanent extension of these tax cuts (even “just” most of them as proposed by President Obama) would add significantly to the federal debt, bringing it to more clearly “unsustainable” levels of around 80 percent of GDP in just ten years–and highlights the fact that allowing (just) the top-end rate brackets to expire (continuing tax cuts in full for those with incomes under $250,000) barely saves money relative to the cost of extending the entirety of the Bush tax cuts.  Another way the Pew report highlights how costly the Bush tax cuts are is to point out how hard it would be to pay for the extension of the tax cuts by reducing government spending; for example, one way to pay for extending “only” the Bush tax cuts that President Obama proposes to extend would be to cut all mandatory and discretionary federal spending by 5 percent.  (If you want to extend all the Bush tax cuts, you’d have to cut all federal spending by 7 percent.)

The Pew report also suggests that you could make the extension of the Bush tax cuts not so much a “mother of a” tax extender by extending them for only two years, rather than permanently.  But then of course you get back to Howard’s fundamental question: is there really such a thing as a fiscally-responsible (inexpensive and truly “expiring”) tax extender?

The Pew report doesn’t really provide any estimates that the CBO budget outlook hadn’t already provided; it just more clearly highlights the significance of the policy choice the Obama Administration will make about the Bush tax cuts.  Concord’s “plausible baseline” uses the CBO numbers on expiring tax provisions another way, to show that under a fiscally “worst-case” scenario where all expiring tax provisions currently on the books (including stimulus tax cuts) are permanently extended and entirely deficit financed, these tax cuts would add $6.3 trillion to the ten-year (2010-20) budget deficit, which under current law (assuming all expiring tax provisions actually expire as scheduled) is “just” $6.0 trillion.

So this is a huge deal–this proposed permanent extension of most of the Bush tax cuts.  As this hilarious Onion story suggests, it is like a “sprouting leaf of spinach.” How so?

After nervously clearing his throat, Motley was heard to ask, “Wherefore is the National Debt like a sprouting leaf of spinach?” When a glowering Obama demanded the answer, Motley stated, “For it shall rapidly grow into something our children cannot bear.”

Of course, it didn’t pay for Bush spending policy, either, but the point is there’s even more of a disconnect between the revenues raised under the Obama-proposed Bush tax policy extended and projected Obama-proposed spending.

The above video clip from CNN’s IOUSA Solutions special (simply titled “Federal taxes fall short of spending” and featuring me on the panel and my boss Bob Bixby in the film) makes this simple point:  There’s a huge gap between spending and revenues, and no one solution, and in fact no “simple” solution (such as trimming only the defense budget or cutting only “waste, fraud and abuse”) will suffice.  And on the eve of the dreaded “Tax Day”, this should remind us that revenues, i.e., Taxes, will (unfortunately) have to come up.  But again, as only one part of the not-so-easy solution.

(Oh, and by the way, despite this story in yesterday’s Washington Post, I do think that gap between spending and revenues is still “huge”–even if it turns out to be “only” $1.3 trillion and not the Administration’s originally forecasted $1.6 trillion.  That was yet another way in which the Obama Administration seems to be continuing the federal budget practice of the prior Administration in ways I just don’t “get.”)

If you’re not too busy watching golf or your own kid on the Little League field (that’s where I’ll be on Saturday), please tune in to CNN for the “Your $$$$$” show on either Saturday at 1 or Sunday at 3.  From the “All Things CNN” blog, here’s the scoop:

This weekend, CNN’s Your $$$$$ will feature sections of I.O.U.S.A.: Solutions – America’s Debt Crisis, a groundbreaking and timely documentary that takes on what some say is the biggest problem facing our country – the national debt. In this follow-up film to the original documentary I.O.U.S.A. featured on CNN last year, the dire debt situation is explored from all angles. Your $$$$$ co-host Christine Romans moderates a panel that not only covers all viewpoints, but spans across generations. I.O.U.S.A.: Solutions is a documentary directed by Patrick Creadon, produced by Christine O’Malley, and presented by the Peter G. Peterson Foundation.

Panel guests include: Pete Peterson, Founder and Chairman of Peter G. Peterson Foundation, Co-Founder and Chairman Emeritus of The Blackstone Group and former U.S. Commerce Secretary; David Walker, President and CEO, Peter G. Peterson Foundation and former U.S. Comptroller General; Bill Bradley, former U.S. Senator and Managing Director, Allen & Company LLC; Amy Holmes, Independent Conservative and Co-Host, Talk Radio Network’s “American Morning News;” Diane Lim Rogers, Chief Economist, The Concord Coalition and Blogger, Economistmom.com; Maya Maguineas, President, Committee for a Responsible Federal Budget and Director, Fiscal Policy Program, New America Foundation; Joe Johns, CNN Correspondent; Jeanne Sahadi, Senior Writer, CNNMoney.

CNN Your $$$$$ - I.O.U.S.A.: Solutions - America’s Debt Crisis will be 2 hours 1 – 3 pm (ET) on Saturday and 3-5pm (ET) on Sunday!!!!!!

I was in NYC today, taping the CNN special on the new sequel to IOUSA the movie, called “IOUSA Solutions”–produced again by husband-wife team Patrick Creadon and Christine O’Malley.  I was certainly the least famous person on the studio panel which was comprised of Bill Bradley, Pete Peterson, David Walker, Maya MacGuineas (president of Committee for a Responsible Federal Budget), Amy Holmes (conservative talk radio host), and CNN’s Joe Johns and Jeanne Sahadi.  Christine Romans was the host, and she did a wonderful job.  (She’s expecting son #3 by the way!)  Not sure why I was invited, but it was fun, and I didn’t even feel tempted to kick Amy Holmes under the table, by the way.

The two-hour special is supposed to air on CNN this Saturday at 1 pm EST and Sunday at 3 pm EST, “barring breaking news” as the producer puts it.  I will keep you posted.

The photo is of me with my post-CNN-taping hair and makeup, self-captured on my webcam on my ride back to DC on the Amtrak–that’s the “on track” reference.  I think CNN’s NYC studio does better hair and makeup than their DC studio.  Or maybe I’ve gotten more fond of the very heavy makeup because I realize it really does make one look younger.  My appearance in the CNN studio is quite the contrast to how I look in the actual documentary (where I have maybe one sentence, about the Bush tax cuts, of course), where I had gotten only a few hours sleep the night before and was being interviewed at Concord–where we don’t exactly keep a makeup artist.  Maybe you’ll see what I mean later this week.

No longer is Concord in “wake up” to fiscal reality mode–we are trying to discuss “solutions” now.  Today’s event at the University of Maryland, with House Majority Leader Steny Hoyer, is a prime example.  (You’ve heard how much I admire “Steadfast Steny” before.)

As the Concord announcement explains:

Date and Time:

Thursday, April 1, 2010 - 4:00pm - 5:30pm

Address:

University of Maryland

Samuel Riggs IV Alumni Center

Orem Alumni Hall

College Park,

Maryland

The Concord Coalition and the University of Maryland School of Public Policy’s Saul I. Stern Professorship of Civic Engagement will be hosting the Fiscal Solutions Tour on Thursday, April 1, 2010 at the Samuel Riggs IV Alumni Center on the Unviersity of Maryland campus in College Park, Maryland.  This public discussion about our nation’s fiscal future will feature United States House of Representatives Majority Leader Steny H. Hoyer.

There will be panel discussion featuring:

David M. Walker, former Comptroller General of the United States and President & CEO of the Peter G. Peterson Foundation

Robert L. Bixby, Executive Director of The Concord Coalition

William D. Novelli, former President of AARP, and Professor at the McDonough School of Business at Georgetown University

Andrew G. Biggs, former Principal Deputy Commissioner of the Social Security Administration, and Resident Scholar at the American Enterprise Institute

This panel of nationally recognized experts will discuss the urgent need to address our nation’s unsustainable fiscal outlook and propose potential solutions.

For more information click here: http://www.publicpolicy.umd.edu/sppupdate/fiscalwakeup.

And note the event will be live-streamed (we hope) from this page.  Please tune in if you can’t join us in person!

House Majority Leader Steny Hoyer gave a speech on fiscal responsibility at the Brookings Institution today. He reaffirmed his strong faith in PAYGO (pay-as-you-go) budget rules as “so valuable” to the cause–although he acknowledged the large exemptions for current policy and at the same time brushed that qualification aside a little too easily (for my tastes).

But my favorite part was when he talked about how the politically easy choices are the economically devastating ones:

The most important lesson we can draw from the years of recklessness is this: when it comes to budgeting, what is politically easy is often fiscally deadly. It is easier to pay for tax cuts with borrowed money than with lower spending; easier to hide the true costs of war than to lay those costs before the people; easier to promise special cost-of-living adjustments than explain why an increase is not justified under the formula in law; easier to promise 95% of Americans that we won’t consider raising their taxes than to ask all Americans to contribute for the common good. Those kinds of easy choices are so often selfish choices—because they leave the chore of cleaning up to someone else. Easy choices may be popular—but the popularity is bought on credit.

Washington’s behavior will only change when the incentives change: when voters demand more responsibility, and when the political price for easy choices rises sharply. As I said, I’m hopeful that just that is happening. But the public has a responsibility, too: to educate itself about the sources of the deficit and the range of realistic solutions—not to demand that government continue to escalate entitlement payments and lower the deficit at the same time.

We can’t meet this challenge unless the public is ready to confront tough choices, and unless leaders in both parties are ready to be honest about tough choices. When deficit solutions meet resistance, which they will, and when they are painful, which they will be, it’s our job to explain why they are also correct—and essential.

“Steadfast Steny” can talk like this without being a hypocrite, as he’s taken a lot of courageous positions and votes, even in his role as Majority Leader where he’s supposed to be worried about the politics.

UPDATE Tuesday morning: The NYTimes’ Jackie Calmes points out that Steny bravely “challenged the sacred cows in his own party” by suggesting some fairly specific options to damp down spending on Social Security and Medicare. My observation is that for most in Steny’s “own party”–including the President himself–the (Bush) tax cuts for that very-broadly-defined middle class of households with incomes under $250,000 have (bizarrely) become another “sacred cow” of theirs (the Democratic Party). And that’s the problem. How can the Democrats work in a bipartisan manner with Republicans if what they would otherwise negotiate on–in terms of “I’ll give up this (entitlement spending) if you give up that (tax cuts)”–is not really bargaining for anything they really want?

Bob (see ABC News video above):  Because the “trickle” of red ink has turned into a “flood”–and neither political party is doing enough to stem it.

Dave (from Politics Daily interview): Because it’s like a “super subprime” crisis that “mortgages the future” of our children and grandchildren.

Peter (a la the Washington Post’s Dana Milbank):  Because it’s “sexy”?…

Bo Obama in the snow outside the White House today (photo by Getty Images from washingtonpost.com).

Despite the record snowfall here in DC, the Senate made it to the office today by God (most of us couldn’t even make it past our driveways), and they made some progress on health reform, with Majority Leader Reid securing the crucial “60th vote” from Senator Nelson of Nebraska. Looks like there will be a Senate-passed bill by Christmas.

Negotiating for that 60th vote didn’t necessarily make the bill any “better” though.  (Note the official “purpose” of Leader Reid’s so-called “manager’s amendment” as written at the top of the legislative text:  “To improve the bill.”)  The Congressional Budget Office expresses some continued skepticism about the cost control that will be achieved under the bill, despite their official scoring of the bill as deficit reducing even beyond the prior version of the bill (emphasis added):

These longer-term calculations assume that the provisions are enacted and remain unchanged throughout the next two decades. However, the legislation would maintain and put into effect a number of procedures that might be difficult to sustain over a long period of time. Under current law and under the proposal, payment rates for physicians’ services in Medicare would be reduced by about 21 percent in 2010 and then decline further in subsequent years. At the same time, the legislation includes a number of provisions that would constrain payment rates for other providers of Medicare services. In particular, increases in payment rates for many providers would be held below the rate of inflation. The projected longer-term savings for the legislation also assume that the Independent Payment Advisory Board is fairly effective in reducing costs beyond the reductions that would be achieved by other aspects of the legislation.

Based on the longer-term extrapolation, CBO expects that inflation-adjusted Medicare spending per beneficiary would increase at an average annual rate of less than 2 percent during the next two decades under the legislation—about half of the roughly 4 percent annual growth rate of the past two decades. It is unclear whether such a reduction in the growth rate could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or would reduce access to care or diminish the quality of care.

And a CQ story [accessible via subscription only] explains part of what turned Senator Nelson around (emphasis added):

As expected, the manager’s amendment to the bill (HR 3590) would drop a new government-run insurance plan, or public option, that is dear to liberals…

The amendment also tightens restrictions on insurance coverage for abortion…

Nelson also won an assortment of smaller changes to the bill that would assist rural hospitals — important to his state — and increase payments for Nebraska’s Medicaid program. “I will vote for health care reform because it will deliver relief from rising health care costs to Nebraska families, workers, rural communities and employers,” he said in a statement…

[T]hanks to the manager’s amendment, Nebraska would receive 100 percent federal financing for new Medicaid beneficiaries in perpetuity…

Majority Leader Harry Reid, D-Nev., said he negotiated with Nelson over a period of “many, many weeks,” but played down the idea that Nelson received special treatment not afforded other senators. He said the manager’s amendment reflected “a number of different interests” of various senators.

“You will find a number of states are treated differently than other states,” Reid said. “That’s what legislation is all about. It’s compromise.”

Reid said the legislation included various provisions designed “to get a number of different people’s votes.”

So ’s no day to stop working, but maybe it’s the perfect day for a “snow job” on how politics as usual is producing better government?…

Well, they come in lots of varieties and come from all different parts of the country.  Here’s a neat little video CNN-Money produced out of their tagging along with the Concord Coalition’s “fiscal advisory councils”–whose representatives came to DC earlier this week to take their message (and model good behavior) to Congress.

…and A Side Note to Readers:  By the way, this is “Nutcracker week” on the homefront–which means I don’t have much time to think and write because I’m spending most of this week doing things like shopping for false eyelashes, sewing ribbons onto ballet slippers, and attending performances (as well as attending to injuries).  Glad there are so many good things out there to point to in place of doing my own work!… 

At our national conference on fiscal stewardship on Capitol Hill yesterday, the Concord Coalition released a report containing the recommendations of its nationwide “fiscal advisory councils.”  The report is impressive, not so much for its length and the number and variety of policy recommendations (you can certainly find even more pages and more policies in the CBO’s “budget options” volumes), but rather because it represents the culmination of a “mini political process” of sorts, where diverse groups of people came together to learn, discuss, and debate the various tough choices necessary to achieve fiscal sustainability, and yet ultimately came to consensus about some general principles and some specific policies.

As Concord’s press release explains:

Hoping to protect their children and grandchildren from a dismal economic future, concerned citizens across the country are prepared to make the difficult choices necessary to put government finances on a more responsible path.

This becomes clear in a report released today by The Concord Coalition on the first year of its Fiscal Stewardship Project. Supported by a grant from the Peter G. Peterson Foundation, the project established six advisory councils around the country to study the long-term fiscal and economic challenges facing the United States and to recommend possible solutions.

The fiscal advisory councils were formed in Atlanta, Iowa, Milwaukee, Northern California, Northern Virginia and Philadelphia. In addition, a special student engagement project was conducted in Denver.

“Politicians may be surprised at how emphatic ordinary citizens are about fiscal responsibility and what solutions they are prepared to consider once they have studied the issues,” said Robert L. Bixby, executive director of The Concord Coalition. “The work of the fiscal advisory councils should demonstrate to elected officials that their constituents are ready and willing to help make the hard choices that good fiscal stewardship requires now and for future generations.”

Concord’s report includes an overview followed by individual reports from each of the advisory councils that present their findings and recommendations on everything from new taxes to reductions in entitlement benefits.

While each fiscal advisory council approached its work differently, eight central themes emerged:

• Disappointment and frustration with Washington
• A preference for broad, sweeping reforms rather than piecemeal efforts
• A sense of urgency
• The essential need for improvements in the health care system
• A willingness to consider significant changes in Social Security
• Deep concern for future generations
• The need to better educate the public
• Commitments to future action

“Advisory council members across the country are disappointed that Washington has failed to exercise greater responsibility in handling the nation’s finances,” the project overview says. “They decried a long and continuing pattern of elected and appointed federal officials failing to set meaningful budget priorities, borrowing more than was necessary, and refusing to pursue obviously needed reforms in both the public and private sectors.”

In other words, Concord’s fiscal stewardship project and the great work and dedication of its fiscal advisory councils are intended to inspire fiscally responsible behavior by modeling good behavior.  It’s a totally different strategy from, say, participating in tea-party protests or otherwise opposing specific policies that threaten the generosity of one’s own government benefits.

CNN-Money.com’s Jeanne Sahadi covered yesterday’s event and wrote this story, pointing out that:

Unlike politicians, [Concord's fiscal advisory] councils were able to deliberate without worrying about getting re-elected. They were outside the partisan cauldron that contorts the statements of even the most level-headed politician.

The councils were not unanimous in their suggestions. But there were some commonalities. Chief among them: disappointment with Washington, and in particular, politicians’ use of budget tricks to disguise the true cost of legislation. The Milwaukee council didn’t mince words, referring to “an overarching failure in the management of the nation’s business.”

The councils prefer sweeping reform to half-measures.

“We must examine the policy goals of all taxes and expenditures, change entitlement programs, cut all federal expenses that do not meet our goals and, if necessary, raise taxes,” the Northern California council concluded.

And when it comes to facing up to fiscal challenges, they would like lawmakers to make it snappy. “The sooner policymakers get working on solutions, the better,” the Philadelphia council wrote…

The Atlanta council put it this way: “If Americans don’t make the hard decisions now, it will have a devastating impact on the quality of life for our children and grandchildren.”

And Jeanne shot some video interviews of a few of the advisory council members, which I’ll be sure to share with you here once they’re up on CNN.com later this week.  You’ll be impressed.  Our advisory council members meet with their respective members of Congress today (as I write!), and I hope the politicians will be impressed (and impressionable), too.