With the federal deficit already north of $300 billion and the price of Katrina estimated at close to $200 billion dollars, Republicans in Congress are beginning to think of some ways to offset the new spending. As The Hill‘s Jonathan Allen reports, the Budget Committee Chairman in the Senate is thinking about a very novel idea (at least for someone in his party) — a tax increase.
The chairman of the Senate Budget Committee refused to rule out increasing taxes yesterday as he and many of his GOP colleagues called for offsets to temper the effect of the next round of federal spending for disaster relief in the Gulf Coast.
“We’ve got two sides to the ledger,� said Sen. Judd Gregg (R-N.H.). “I’m willing to look at a revenue solution … as part of a package.�
Though Gregg declined to specify or rule out any solution, there are limited options for generating revenue, many of which involve deferring expected tax cuts or increasing taxes in a targeted or across-the-board fashion.
Conservatives demanded accountability and offsets in the next package of spending for the recovery from Hurricane Katrina, but many of them, including House Majority Leader Tom DeLay (R-Texas), scoffed at tax increases.
“The so-called Katrina tax hikes are not about Katrina; they’re about tax hikes and will only serve to balloon the oversized, under-responsive emergency-management system that broke down three weeks ago in the wake of the hurricane,� DeLay said in a House floor speech, according to prepared remarks provided by his office.
So if raising taxes — or even deferring tax cuts — is off of the table in the House, what do House Republicans think the solution is? Massive spending cuts. Carl Hulse has the story for The New York Times.
Conservative House Republicans plan to recommend on Wednesday more than $500 billion in savings over 10 years to compensate for the costs of Hurricane Katrina as lawmakers continue to struggle to develop a consensus on the fiscal approach to the disaster.
At the top of a partial list of the potential cuts being circulated on Tuesday were previously suggested ideas like delaying the start of the new Medicare prescription drug coverage for one year to save $31 billion and eliminating $25 billion in projects from the newly enacted transportation measure.
The list also proposed eliminating the Moon-Mars initiative that NASA announced on Monday, for $44 billion in savings; ending support for the Corporation for Public Broadcasting, $4 billion; cutting taxpayer payments for the national political conventions and the presidential election campaign fund, $600 million; and charging federal employees for parking, $1.54 billion.
This might be where the substantial small government contingent of the House GOP stands, but what does the party leadership think about this?
Before the list was made public, Representative Tom DeLay of Texas, the House majority leader, declared that delaying the Medicare plan was a nonstarter. Mr. DeLay also expressed skepticism that most lawmakers would want to revisit the transportation bill, saying he would be reluctant to sacrifice the projects that he won for his district in the Houston area.
So the answer? Using deductive logic, if Republicans won’t allow for tax cuts and don’t have the stomach for spending cuts, it seems the only alternative is to add hundreds of billions of dollars to the federal deficit. Given that this plan commands the support of 14 percent of Americans, it will be interesting to see how the Republicans try to spin this come next November.
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Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.