Budgets and Revenue Committee News
November 12, 2010
Vol. 1, #1
An Information Service of the NCSL Budgets and Revenue Committee
Co-Chairs of President’s Deficit Commission Reveal Proposal
The two co-chairs of President Obama’s National Commission on Fiscal Responsibility and Reform released a proposal on November 10, 2010 to stabilize the nation’s debt. Erskine Bowles and former Senator Alan Simpson offered a comprehensive report that would provide $200 billion in domestic and defense savings by 2015, address the Medicare “doc fix,” and provide tax reform that would simplify the code and broaden the base. Included in the proposal is the elimination of the alternative minimum tax and the state and local tax deduction, and reforming social security by adjusting the cost of living adjustments. A full view of the proposal is available here: http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf. Additionally, the National Commission on Fiscal Responsibility and Reform postponed their meeting on November 10, instead rescheduling for November 30, just a day before the release of the Commission’s recommendations.
Bipartisan Peterson-Pew Commission Releases Debt Reduction Plan
The co-chairs of the President’s deficit commission weren’t the only group to release a broad reduction plan. A collaborative effort from the Peter G. Peterson Foundation, the Pew Charitable Trusts and the Committee for a Responsible Budget, titled Getting Back in the Black, offers recommendations on how policymakers can reform the federal budget process to help stabilize America’s debt-GDP ratio. The November 10, 2010, proposal recommends Congress establish a new law with enforcement mechanisms for annual fiscal targets along with a multi-year budget plan. The full document is available here: http://budgetreform.org/document/getting-back-black.
112th Congress Sweeps in New Leadership for Budget and Tax Committees
Last week’s elections have significantly altered the leadership and outlook of several spending and budget committees, especially with Republicans obtaining a majority in the House. This change has swept Rep. Paul Ryan (WI) to chair the House Budget Committee, while former chair and current ranking member Rep. Jerry Lewis (CA) is set to battle Rep. Harold Rogers (KY) for the lead position with the House Appropriations Committee. Rep. Norm Dicks (WA) will likely succeed David Obey (WI) for ranking member of the Appropriations Committee while Rep. Chris Van Hollen (MD) will attempt to inherit the Democratic leadership post of the House Budget Committee after Rep. John Spratt (SC) was defeated on November 2. The Senate Appropriations Committee appears unchanged, with Sen. Daniel Inouye (HI) and Sen. Thad Cochran (MS) retaining their positions as chair and ranking member, respectively. Meanwhile, Republicans will have new leadership for the Senate Budget Committee, as retiring Sen. Judd Gregg (NH) will be succeed by Sen. Jeff Sessions (AL). Current Chairman Sen. Kent Conrad (ND) is mulling an offer to chair the Agriculture, Nutrition and Forestry Committee.
Big Ticket Items Facing Federal Policymakers
When the 111th Congress reconvenes next week, members will face the daunting task of trying to resolve a potpourri of fiscal issues before year’s end. Punting some of them to next year seems inevitable. Among the issues is “patching” the alternative minimum tax (AMT) for 2010. This has become an annual ritualistic dance and carries for 2010 a price tag of $61 billion - $72 billion depending on the exemption level chosen for an estimated 21 million new taxpayers that would fall under the AMT unless the exemption is enacted. In previous years, Congress has chosen to look the other way and not offset the cost of the “patch.” But the frenzied rhetoric over deficit reduction and debt management may have changed how Congress will approach the issue this year. There is a slew of other “big ticket” items, including: preempting a 23 percent reduction in Medicare provider reimbursements ($9 billion); providing another round of unemployment insurance benefits (the last extension cost out at $35 billion for five months); extending the 2001 and 2003 tax cuts permanently (anywhere from $3.1 trillion to $3.8 trillion over ten years); and reauthorizing four dozen expired federal tax credits, including state and local sales tax optional deductibility ($40 billion).