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Revised "Tax Extenders" - Same Old Failed Stimulus Policy |
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Based on press accounts of the modifications made to the tax extenders bill (H.R.4213), scheduled to be on the floor either this afternoon or tomorrow, one could get the impression that Democrats wanted to get "tough" on spending and deficits. However, further analysis of the revisions only show that the majority is up to their old tricks: higher taxes, higher spending, and Enron-like accounting gimmicks
Increasing taxes: The original bill raised $75 billion in permanent new taxes. Those taxes were to be imposed upon capital investment (carried interest), small businesses (service S corporation), and an increase in the oil spill liability excise tax. The bill released on May 20, 2010, increased the oil spill excise tax from 8 cents to 32 cents. Not satisfied with that increase, the modification would again increase the excise tax, from the proposed 32 cents to 34 cents. These increased taxes would be absorbed into the cost of gasoline at the pump, service businesses, and investments that would be passed onto the consumer. Total tax increases keep to $77 billion and after $35 billion in tax relief, taxpayers would be hit with a $42 billion net tax increase.
Tax Relief Provisions: Given a second chance to revise and modify this bill to improve it, the Democrats have provided zero additional tax relief. The original bill wanted to provide $1 of extended relief for $2.14 of permanent tax increases. Now, each $1 of extend tax relief comes at a cost of $2.27 in tax increases.
Enron Endorsed Accounting: The bill continues to double count the per-barrel excise tax that funds the oil spill trust fund. This accounting method conveniently allows that for each dollar in revenue received from the excise tax, it would both go toward reducing the deficit and funding the oil spill liability trust fund.
Furthermore, to make this bill seem less of a fiscal disaster, the majority just simply scaled back the timeline. This new bill, claimed by the Democrats to "save" $50 billion compared to the original bill is another impressive accounting gimmick. Under this scenario, the law assumes that it will fund the Doc Fix for the next 19 months and then just suddenly stop all funding at the end of 2011-something that is very unlikely.
- Doc Fix: The original proposal included three and a half years of funding at a cost of $64.9 billion. The revised bill only provides 19 months of funding at $25.2 billion.
- COBRA and Unemployment Benefits: Originally extended through 2010 at a cost of $54.8 billion, the modification would reduce the extensions by one month, disguising nearly $8 billion, for a total cost of $46.8 billion.
15 Days Worth of Debt: The modifications reduce the amount of net spending from $174 billion to $127 billion, resulting in an $84 billion increase in the deficit. According to the Ways and Means Committee, the impact on the deficit of the original bill would have caused the country to hit the statutory debt limit on February 27, 2011. This newly revised, "fiscally responsible" bill would delay that until March 14, 2011-for a total of 15 days.
Much like the Democrats have done in the past, they'll distort and manipulate funding periods, the way programs are funded in the out years, shift certain provisions to other legislative vehicles, and increase taxes. All of this is meant to achieve on goal: higher spending and bigger government.
Latest reports indicate the Blue Dog Democrats agree, and the Democrats still lack the votes to pass their latest "stimulus" bill.
