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Miscellaneous meanderings and philosophical ramblings. The title from a spiral notebook I used to jot down my thoughts on religion and other matters some years ago. I like to write, think and express my views on various issues. Robust discussion is welcome.

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"Lan astaslem."
I will not submit. I will not surrender.
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Friday, January 05, 2007

Taxes and spending with Democrats in control

Mr. rock, let me introduce you to Mr. hard place. A rule change in Congress could make budget matters a bit difficult in the near future.

New budget rules could straitjacket Democrats (excerpts)

One rule requires that tax cuts have corresponding cuts in government spending or tax increases elsewhere to pay for them. Likewise, any increase in entitlement programs like Medicare would have to have corresponding tax increases, or equal cuts in other government programs, under the pay-as-you-go rule reinstated Friday. It was adopted 280-154. (Interactive: The Democrats '100 Hour' agenda)

If strictly enforced, the PAYGO rule would make it difficult for Democrats to pass increases in federal benefit programs such as Medicare or the Medicaid health care program for the poor or disabled. In the near term, it would mean Democrats' bill to cut student loan rates will be less generous than they'd like. The rule would also threaten efforts to extend Bush's tax cuts, most of which expire at the end of 2010.

Anyone think that the tax cuts will be the least threatened item?

Democratic budget hawks, especially the moderate-to-conservative "Blue Dogs," say that restoring the PAYGO rule is crucial to curbing the budget deficit. Various forms of the rule were in place from 1990-2002, however, and Congress often found ways around it.

The version adopted Friday can easily be waived. Still, the incoming chairman of the Budget Committee, John Spratt Jr., D-South Carolina, touted it as better than the status quo.

"You've got to offset those tax cuts," Spratt said. "And if you want to enhance an entitlement, you've got to pay for it."

Problem is, they tend to do static scoring of tax cuts and their impact on tax revenue, rather than dynamic scoring which attempts to take into account how tax cuts affect the behavior of individuals and businesses.

But don't worry, they'll just call the tax increases "investments" and everything will be ok.

And how can we worry when Ms. Pelosi has this to say?

And she alluded to one of the reasons women have been slow to climb the political ladder, saying federal policy has never recognized women's need for child care. "This Congress is going to be about children," she said.

Yep, we'll certainly hear more of those magical words in various incantations to come, "investments", "it's for the children". My goodness, I should just hand over one of my monthly paychecks right now. How can I pass up investments and doing it for the wee little ones?



The GOP largely failed when it had the chance to reign in the budget and be fiscally responsible. Thanks to their many unforced errors and other factors, tax payers may soon find themselves between a rock and a hard place regarding the current tax cuts. However, the near term negative effects of losing the tax cuts might have long term positive results. While it's difficult to imagine such political savvy from a party that is notorious for snatching defeat from the jaws of victory, it may be possible for the GOP to hang this on the necks of the Democrats from now, all the way to 08 and strengthen the fiscally responsible element of the party. I'm not holding my breath though.


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