‘Line’ Items: Coming and Going Edition
Gone and Back – The Senate has left for its August recess, the House will return this week (for a day). Congress will be back in session after Labor Day for a frenetic month before adjourning again in October for final pre-election campaigning.
State Aid Frees Senate, Brings Back the House – The Senate approved a package of aid to states and localities on Thursday and adjourned later in the day. The bill, HR 1586, provides $16 billion to states for Medicaid payments and $10 billion to help keep teachers, police, and other civil servants from being laid off. The House will return to Washington for one day this week to approve of the measure so that the aid can get to states before the school year begins. The $26 billion cost is fully paid for.
Small Biz Bill Forgotten But Not Gone – The Senate was not able to complete work on a bill to aid small businesses, HR 5297, last week, largely due to the state aid bill and the vote on Elena Kagan’s nomination to the Supreme Court, but Senators vowed to resume work as soon as they return. The bill will provide $12 billion in tax breaks and create a $30 billion lending pool for small businesses.
Tax Debate Coming Next Month – The Senate will take up the issue of the 2001 and 2003 tax cuts that are set to expire at the end of the year in September, setting up a heated debate just before the election between those who want to permanently extend all the cuts and those who want to follow the president and extend them only for families making less than $250,000. Those supporting the complete extension argue that it will help stimulate the economy while those favoring only the extension for the middle class contended that giving tax breaks to the wealthy in a time of massive budget deficits is unwise. While it is necessary to deal with the tax cut issue, it should be framed within the larger debate over how we reform our antiquated and inadequate tax system so that it can efficiently meet our needs going forward. A possible solution is a temporary extension that will create space for a deal on fundamental tax reform and a credible fiscal plan to deal with the debt.
Social Security and Medicare: Here Today, Gone Tomorrow, Without Action -- The Trustees overseeing Social Security and Medicare released their annual reports Thursday on the finances of the two programs. They warned that both vital programs are on an unsustainable path in the long run because of demographic trends and that changes will be required to bolster their long-term finances. See here for CRFB’s analysis of the Social Security report.