In this podcast, we’ll discuss the key issues facing Congress during the lame duck session that began yesterday. I’m Michelle Bazie and I’m joined by Jim Horney, the Center’s director of Federal Fiscal Policy.
BEYOND THE NUMBERS
We issued a major analysis today of the November 10 proposal by the co-chairs of President Obama’s fiscal commission, former Clinton White House Chief of Staff Erskine Bowles and former Republican Senator Alan Simpson.
Yesterday, Robert Greenstein weighed in on the New York Times’ “Room for Debate” forum, which features commentary from policy experts on a variety of pressing issues. Yesterday’s topic was “16 Ways to Cut the Deficit,” and his recommendation was to let the high-income tax cuts enacted during the Bush Administration expire on schedule, while extending all tax cuts for middle- and low-income households. Here’s the commentary:
President Obama has proposed a new tax break for business investment. It’s intended to boost the economy, but it would have the unintended effect of worsening states’ already severe budget problems. That, in turn, would force states to take steps that would undercut the hoped-for economic stimulus.
New York Times columnist David Brooks ridicules the Affordable Care Act provision tightening businesses’ reporting requirements to the IRS on payments for goods and services: “If you’re a freelancer and you buy a laptop from an Apple store, you have to file a 1099.” Brooks sees that as an “expensive interference in business life.”
A new report from the non-partisan Congressional Research Service (CRS) explains that permanently extending all of President Bush’s tax cuts would be extraordinarily expensive — CRS estimates the cost at $5 trillion over the next decade alone. The report recognizes that Congress, in deciding the future of the tax cuts, will need to consider the current weak economy as well as our unsustainable long-term budget path. But, it concludes, letting the Bush tax cuts aimed at the nation’s wealthiest 2 percent of households expire on schedule at the end of December makes sense from both perspectives. Here are the key quotes:
FactCheck.org has a useful analysis debunking the misleading and downright false statements about taxes in a chain email that’s been circulating the country. The email’s most egregious claim — that taxpayers will owe taxes on the value of their job-based health coverage starting next year — is simply untrue, FactCheck explains.
The most curious aspect of the feverish debate over tax cuts is that President Obama cut taxes for more than 90 percent of working Americans, yet more than 90 percent of Americans have no idea this happened.
Describing the social and economic costs of growing income inequality, economist Robert Frank explained in yesterday’ New York Times that while the first three decades after World War II were a time of broadly shared prosperity, income gains over the next three decades went almost entirely to the very wealthy. You can see the striking contrast in the graph below.
Bill Galston of the Brookings Institution and Maya MacGuineas of the New America Foundation offered a plan last week to reduce federal deficits and push down debt held by the public to 60 percent of gross domestic product by 2020. The plan explicitly recognizes that it would be unrealistic to hold federal revenues and outlays to the averages of recent decades, a topic on which we’ve recently written. We commend Galston and MacGuineas for proposing reasonably specific tax increases and spending cuts rather than relying largely on mechanical formulas that avoid making the hard choices.