Source: http://www.washingtonpost.com/wp-dyn/articles/A64194-2002Jan4.html
CBO Report Rates Bush Economic Proposals Poorly
President Bush plans to tout his economic stimulus plan in a California town-hall meeting today, arguing it is critical to reviving the economy. But the nonpartisan Congressional Budget Office gave poor grades to several of the president's proposals in a report issued yesterday.
The report said several Democratic proposals had a better chance of reviving the economy at the lowest cost. It reserved its highest praise for a "payroll tax holiday" advocated by Sen. Pete V. Domenici (R-N.M.). The administration has been cool to Domenici's plan, but Senate Democrats were open to it during the inconclusive negotiations on a stimulus bill last month.
The stimulus bill stalled in Congress before the holidays, when Democrats and Republicans split sharply on the best mix of tax cuts to bolster the economy. The CBO report evaluated several tax options -- including all four advocated by the president -- for their potential impact over the next year. It did not study proposals to help the unemployed, also a source of tension between the two parties.
Democrats were gleeful over the analysis. "The report ought to provide some helpful guidance to Republicans," said Ranit Schmelzer, spokeswoman for Senate Majority Leader Thomas A. Daschle (D-S.D.). "We hope they take the time to study it and modify their plan accordingly."
But administration officials professed to be unimpressed. "It appears to be a narrow report that fails to take into account the benefits of the economic security plan we put forth," said White House spokeswoman Claire Buchan, citing an administration projection that the president's plan would generate 300,000 jobs. She said that the report did not evaluate long-term benefits and that the president's plan is designed to "help not only in the short term but in the long term."
Of the presidential proposals, the CBO said that two pushed also by Democrats -- tax rebates for people who didn't qualify for last year's tax cut and faster write-offs of business investments -- would have some stimulative effect. But they would be less cost-effective than the proposed holidays from payroll taxes or sales taxes, the report said.
The CBO appeared to side with Democrats on whether the business investment incentives should be limited to one year, compared with the three years sought by the administration. "A longer period would give a bigger average yearly boost, but more of it would come at the end of the period than at the beginning, delaying the stimulative effect," the report said.
Two of the administration's main priorities -- accelerating planned cuts in individual tax rates and repealing the corporate minimum tax -- were rated by the CBO as offering little "bang for the buck." In fact, the CBO said the proposals "would have little prospect of generating first-year stimulus that exceeded the revenue forgone."
Accelerating cuts in higher tax brackets would affect only the top 30 percent of taxpayers, the CBO said, while lower-income households would tend to spend more in response to lower taxes. The CBO also said the option is not cost-effective because most of the revenue loss would take place between 2003 and 2006, after the recession will probably have ended.
Repeal of the corporate minimum tax also fared poorly in the CBO analysis. The report noted that only about 0.5 percent of corporate taxpayers pay the tax, which was enacted to make sure no corporation could avoid paying taxes through deductions and other tax-avoidance methods. Moreover, the CBO said that eliminating the corporate minimum tax "does little by itself to change the near-term incentive for businesses to invest."
Daschle yesterday also took aim at Bush's tax cut and blamed the president for a national loss of the budget surplus. "The Republican agenda in Washington today is being written by a wing of the Republican Party that isn't interested in fiscal discipline," Daschle said. "They have one unchanging, unyielding solution that they offer for every problem: tax cuts that go disproportionately to the most affluent."
Melon
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"He had lived through an age when men and women with energy and ruthlessness but without much ability or persistence excelled. And even though most of them had gone under, their ignorance had confused Roy, making him wonder whether the things he had striven to learn, and thought of as 'culture,' were irrelevant. Everything was supposed to be the same: commercials, Beethoven's late quartets, pop records, shopfronts, Freud, multi-coloured hair. Greatness, comparison, value, depth: gone, gone, gone. Anything could give some pleasure; he saw that. But not everything provided the sustenance of a deeper understanding." - Hanif Kureishi, Love in a Blue Time
CBO Report Rates Bush Economic Proposals Poorly
President Bush plans to tout his economic stimulus plan in a California town-hall meeting today, arguing it is critical to reviving the economy. But the nonpartisan Congressional Budget Office gave poor grades to several of the president's proposals in a report issued yesterday.
The report said several Democratic proposals had a better chance of reviving the economy at the lowest cost. It reserved its highest praise for a "payroll tax holiday" advocated by Sen. Pete V. Domenici (R-N.M.). The administration has been cool to Domenici's plan, but Senate Democrats were open to it during the inconclusive negotiations on a stimulus bill last month.
The stimulus bill stalled in Congress before the holidays, when Democrats and Republicans split sharply on the best mix of tax cuts to bolster the economy. The CBO report evaluated several tax options -- including all four advocated by the president -- for their potential impact over the next year. It did not study proposals to help the unemployed, also a source of tension between the two parties.
Democrats were gleeful over the analysis. "The report ought to provide some helpful guidance to Republicans," said Ranit Schmelzer, spokeswoman for Senate Majority Leader Thomas A. Daschle (D-S.D.). "We hope they take the time to study it and modify their plan accordingly."
But administration officials professed to be unimpressed. "It appears to be a narrow report that fails to take into account the benefits of the economic security plan we put forth," said White House spokeswoman Claire Buchan, citing an administration projection that the president's plan would generate 300,000 jobs. She said that the report did not evaluate long-term benefits and that the president's plan is designed to "help not only in the short term but in the long term."
Of the presidential proposals, the CBO said that two pushed also by Democrats -- tax rebates for people who didn't qualify for last year's tax cut and faster write-offs of business investments -- would have some stimulative effect. But they would be less cost-effective than the proposed holidays from payroll taxes or sales taxes, the report said.
The CBO appeared to side with Democrats on whether the business investment incentives should be limited to one year, compared with the three years sought by the administration. "A longer period would give a bigger average yearly boost, but more of it would come at the end of the period than at the beginning, delaying the stimulative effect," the report said.
Two of the administration's main priorities -- accelerating planned cuts in individual tax rates and repealing the corporate minimum tax -- were rated by the CBO as offering little "bang for the buck." In fact, the CBO said the proposals "would have little prospect of generating first-year stimulus that exceeded the revenue forgone."
Accelerating cuts in higher tax brackets would affect only the top 30 percent of taxpayers, the CBO said, while lower-income households would tend to spend more in response to lower taxes. The CBO also said the option is not cost-effective because most of the revenue loss would take place between 2003 and 2006, after the recession will probably have ended.
Repeal of the corporate minimum tax also fared poorly in the CBO analysis. The report noted that only about 0.5 percent of corporate taxpayers pay the tax, which was enacted to make sure no corporation could avoid paying taxes through deductions and other tax-avoidance methods. Moreover, the CBO said that eliminating the corporate minimum tax "does little by itself to change the near-term incentive for businesses to invest."
Daschle yesterday also took aim at Bush's tax cut and blamed the president for a national loss of the budget surplus. "The Republican agenda in Washington today is being written by a wing of the Republican Party that isn't interested in fiscal discipline," Daschle said. "They have one unchanging, unyielding solution that they offer for every problem: tax cuts that go disproportionately to the most affluent."
Melon
------------------
"He had lived through an age when men and women with energy and ruthlessness but without much ability or persistence excelled. And even though most of them had gone under, their ignorance had confused Roy, making him wonder whether the things he had striven to learn, and thought of as 'culture,' were irrelevant. Everything was supposed to be the same: commercials, Beethoven's late quartets, pop records, shopfronts, Freud, multi-coloured hair. Greatness, comparison, value, depth: gone, gone, gone. Anything could give some pleasure; he saw that. But not everything provided the sustenance of a deeper understanding." - Hanif Kureishi, Love in a Blue Time
