Budget

The health care reform bill recently passed by the Senate Finance Committee relies on a $200 billion health insurance tax to help fund the costs of expanding health insurance coverage. Although there are some exceptions, the policy generally imposes a 40% excise tax on each dollar of health insurance premium beyond $8,000 for an individual or $21,000 for a family...

Forbes had a piece Monday by Alex Brill and Amy Roden of the American Enterprise Institute about the potential for stimulus programs to expand the debt.

Brill and Roden argue that the savings from health care reform will not do much to reduce the debt because many of the stimulus funds will be extended. The health care bill’s projected $18 billion savings over ten years is dwarfed by the $140 billion a year they estimate Congress will spend making parts of the stimulus bill permanent. The article points out:...

In a speech on global imbalances, Fed Chairman Bernanke again warned about the need to put the U.S. on a sustainable fiscal path, saying:   "The United States must increase its national saving rate.  Although we should deploy, as best we can, tools to increase private saving, the most effective way to accomplish this goal is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time."    This is very similar to the advice CRFB has been recommending...

Recently, the Bureau of Labor Statistics (BLS) reported on the results of the Economic Stimulus Payments, or tax rebates, of early 2008.

Those who were eligible for the full tax rebates (individuals earning under $75,000 and married couples earning under $150,000) received...

This week, Senator Bayh (D-IN) and nine other Democratic senators sent a letter to Senator Harry Reid (D-NV) expressing concern over the size of the U.S. debt. In the letter, the senators argue that:

"The bigger our deficits, the fewer resources we have to provide critical investments in energy, education and health care and tax relief for small businesses and middle-class families...We believe Congress needs to adopt a special process to deal with our nation’s long-term fiscal imbalances. We do not believe that action on these important issues will occur under the regular order in Congress.”...

Today, the Social Security Administration (SSA) announced that, in light of the deflation experienced over the past year, there will be no COLA for Social Security benefits in 2010. This will mark the first year without a COLA since automatic indexing began in 1975.

Given that prices have gone down, we find this lack of COLA to be entirely appropriate, and put out a press release today urging politicians not to enact an ad-hoc COLA. As CRFB President Maya MacGuineas explained...

Today Congressional Quarterly reported that Congress is feeling pressure to extend the tax credit for homebuyers that was included in the stimulus bill in February. The $8,000 tax break, which applies to first time homebuyers, is designed to revive the housing market. The credit ends November 30 and construction and real estate groups are lobbying politicians to extend it.

Johnny Isakson, R-Ga., plans to introduce legislation that would extend and increase the tax break. Under his proposal the credit would last through June 30 and increase eligibility to include individuals making up to $150,000 and families making up to $300,000...

In a recent op-ed, Henry Aaron and Belle Sawhill argued that a value added tax (VAT) – a tax on consumption imposed piece-wise in various stages of production – could help to “bend the revenue curve.” The two argue that health care reform cannot do enough to control the long-term debt, explaining that “Medicare will require increased revenue as the baby boomers retire, even if the program's structure is materially changed,” and that “revenue generated under current tax laws cannot pay for the government services -- health care and everything else."...

In their oped in the Washington Post today, Henry Aaron and Isabel Sawhill argue that raising taxes will be necessary to close the fiscal gap and help pay for the new spending that is part of health care reform. They suggest a VAT dedicated to health spending is the best approach...

 The Senate Finance Committee voted this afternoon 14-9 to pass the America’s Healthy Future Act of 2009 out of Committee. Republican Olympia Snowe was the only Committee member to break party lines and vote for the bill. Majority leader Harry Reid is expected to begin full Senate debate on a version of the bill which reconciles the Finance and HELP bills in the last week of October. Meanwhile, House Democratic leaders are still working on details of their health overhaul legislation, which will also likely go to the floor for debate in late October...