CBO Rates Bush Tax Cut Plans

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Oct 2, 2000
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."


"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
It seems that The Liberals in Washington are trying to take an economy that is showing more and more signs of improvement, making strides towards economic flourishment, and flush it down the toilet because .. A GOOD ECNONOMY is the NIGHTMARE of Every Liberal coming into the election Year.

WHY DId Daschle Kill this bill?.. Because He more than likely knew that there were 60 votes available.. there were some bipartisan Democrats who.. rather than just extending the Handouts and basically.. EXPANDING THE ROLE OF GOVERNMENT (Something Liberals argue the republicans are trying to do.. Go Figure).. Daschle knows there Would Be enough democrats in favor of Helping out the Unemployed.. while at the Same time GIVING THEM JOBS and putting the Country ahead of Partisanship.


Washington Times:

The Democrat-led Senate is expected to kill an economic recovery bill today, leaving $77 billion from President Bush's budget unspent and vulnerable to lawmakers' wishes.
Senate Majority Leader Tom Daschle said he will shelve his bill to help the economy if, as expected, it does not receive the required 60 votes to move forward. Republicans argue that his $69 billion plan is heavy on spending and would not create jobs.
"With great regret, I will pull the bill," Mr. Daschle said, arguing that Republicans were "trying to score political points" by rejecting his plan.
But the South Dakota Democrat also said he will not allow a vote on a bipartisan House-passed bill supported by the White House because it, too, would not garner 60 votes. That plan would pump $89 billion into the economy this year by accelerating income-tax cuts, extending unemployment benefits and providing tax breaks for small businesses.
Senate Minority Leader Trent Lott said Mr. Daschle was "hiding behind procedure."
"The Daschle Democrats, in a cynical effort to score political points against this president, have chosen to fire a direct shot into a limping economy by killing" the proposals, the Mississippi Republican said.
The stalemate comes as Treasury Secretary Paul H. O'Neill told lawmakers yesterday the economy is improving and could grow as much as 3.5 percent this year if Congress approves a bill to encourage growth.
"We see more and more signs every day indicating that the seeds for a recovery are there, and only need nourishing to speed the process of putting Americans back to work," Mr. O'Neill said.
Mr. Bush included $77 billion for economic recovery in the fiscal 2003 budget he introduced Monday. If Congress does not approve a bill, some lawmakers fear their colleagues will find other ways to spend some or all of that money.
Mr. Daschle, for example, said the administration eliminated money from the budget to relocate families in Pierre, S.D., who live near a flood-prone dam.
"Now is that pork? I don't think so," Mr. Daschle said. "That's just one example. There are scores of those examples, and I think we ought to have a good debate about them."
Democrats also are angling for more than the $190 billion proposed by the White House for a prescription drug benefit under Medicare. And lawmakers of both parties are objecting to the administration's plan to trim $9 billion from the federal transportation budget, a traditional source of pork projects.
Sen. Don Nickles, Oklahoma Republican and assistant minority leader, said Democrats are trying to divert this part of the administration's budget into their pet priorities.
"I don't want it to be turned into a spending program," Mr. Nickles said. "The Democrats aren't really interested in stimulus, they're really interested in spending. I don't want them to say, 'Oh, we defeated the stimulus package, now let's go ahead and turn it into a spending free-for-all.'"
Some conservative House Republicans say Congress should approve a balanced budget if lawmakers cannot agree on an economic recovery plan. The administration's budget calls for a deficit of $80 billion. Without the $77 billion economic recovery proposal, conservatives say, lawmakers would only need to trim another $3 billion or so to balance the budget.
House Majority Leader Dick Armey said if Congress fails to approve a bill to help the economy, "the House will have even more need to stop legislation that grows the government."
"We can't afford to be a government that grows when the economy is not growing," Mr. Armey told reporters.
Tom Daschle ranks right up there with DICK Gephardt ass the biggest ASSholes on the hill. In this worthless company, the Ted Kennedy's and Al Gore's of the world don't look quite so bad. (can't believe i just said that)

"Hey Mr. Daschle, whatever happend to bipartisanship in the wake of september 11th??"

"Oh your right, september is over. Thanks for nothing then !"
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