Tax Policy for Lunatics

To Earmarking Senators, Veto Seems to Spell Vote

By Shailagh Murray
Washington Post Staff Writer
Thursday, May 4, 2006; Page A04

Senators keep stuffing new provisions into an emergency spending bill for Iraq and hurricane recovery, ignoring President Bush's veto threat to advance their priorities.

An amendment by Sen. Edward M. Kennedy (D-Mass.), approved 53 to 46 yesterday, would add $289 million to compensate recipients of an experimental flu vaccine, in the event of an adverse reaction. By 51 to 45, senators added $1 million for water monitoring in Hawaii, which was hit by a torrential rainstorm. On Tuesday, the Senate tossed in nearly $1.7 billion in additional flood-control money for the New Orleans area, without offsetting it with cuts to other programs, as Bush had urged.

Despite repeated efforts, Sen. Tom Coburn (R-Okla.) and other fiscal conservatives failed to strip out pet projects, including $6 million in aid for Hawaiian sugar interests and up to $500 million for a Northrop Grumman Corp. shipyard in Pascagoula, Miss., to compensate the company for hurricane-related losses that insurers have refused to pay.

At the bill's core is $72 billion in war-related funding and about $27 billion to aid Hurricane Katrina recovery in Mississippi and Louisiana. But with November midterm elections approaching, senators showed little restraint on items that would prove popular with constituents or important interest groups.

For example, the legislation includes $4 billion in aid to farmers and ranchers to offset rising natural gas costs and provide new relief from drought, floods and wildfires. It contains nearly $800 million in additional highway and transit funding and $2.3 billion to prepare for a possible flu pandemic.

In a speech yesterday, Bush reiterated an earlier pledge to veto the legislation if it tops $94.5 billion. The Senate bill -- which totaled $106.5 billion when it reached the floor last week -- now adds up to nearly $109 billion. Final passage is expected today.

I'll guess that he'll skip the veto and just use "signing statements."

Tax Deal Sets Day of Reckoning
Tough Choice on Deficit in Store for President, Congress in 2011

By Jonathan Weisman
Washington Post Staff Writer
Thursday, May 4, 2006; Page A04

With this week's hard-fought agreement on a $70 billion tax-cut extension, President Bush and congressional Republicans have effectively set a date for a fiscal day of reckoning for the next president and a future Congress: Jan. 1, 2011.

House and Senate negotiators reached agreement this week on legislation to extend the deep tax cuts on capital gains and dividends beyond their scheduled 2008 expiration date, through 2010. Final passage of the agreement must wait until Republican tax writers agree on a second tax bill that includes many of the tax breaks jettisoned from the measure on capital gains and dividends. If the deal wins congressional approval, every major tax cut passed in Bush's first term will be set to expire on the same day five years from now.

At that moment, politicians would face a choice: Either allow taxes to rise suddenly and sharply on everyone who pays income taxes, is married, has children, holds stocks and bonds, or expects a large inheritance, or impose mounting budget deficits on the government far into the future, according to projections by the nonpartisan Congressional Budget Office.

"It is now a decision-forcing event," said Robert L. Bixby, executive director of the Concord Coalition, a budget watchdog group. "This is a potential calamity that cannot happen. They are going to have to deal with it and face the consequences."

In a speech yesterday before the American Council of Engineering Companies, Bush hailed the agreement to extend his 2003 tax cuts on dividends and capital gains, and he implored Congress to make all his tax cuts permanent.

"If the people have their way who want this tax relief to expire, the American people will be hit with $2.4 trillion in higher taxes over the next decade," Bush said. "A tax increase would be disastrous for business, disastrous for families and disastrous for this economy."

See, you can have your cake and eat it, too, as long as you are more than willing to have somebody else (like our grandkids) pay for it.

These are the "grownups?" Puh-leeze.