Monday, Senate Majority Leader Harry Reid (D-NV) filed cloture on the tax extenders package. The bill would extend a variety of tax provisions that expire yearly and require Congress to pass them annually to prevent tax increases for many taxpayers, further extend unemployment benefits, and prevent a 21 percent decrease in payments to doctors that treat Medicare patients – the so-called “doc fix.”
The extension of the expiring tax provisions is a long-overdue exercise for Congress and should be relatively uncontroversial. But Congress – as usual – could not restrain from adding $126 billion in new spending to an otherwise necessary bill.
Some of that spending includes billions for bailouts to states, Build America Bonds, and a Medicaid bailout.
In addition to the irresponsible new spending, the bill would needlessly increase taxes by almost $50 billion over 10 years to offset the cost of extending tax-reducing provisions. But preventing a tax hike is not a tax cut and therefore should not require an offset.
Even with all the tax hikes, the bill still adds $79 billion dollars to federal deficits over the next ten years. In a year when the federal deficit is already projected to reach $1.5 trillion, simply piling on addition debt hardly seems to best course for the nation. The $126 billion in new spending should be stripped out, and a clean bill should be sent to the President.
Fortunately for taxpayers, another option is available. Senator John Thune (R-SD) has offered an amendment that incorporates nearly all of the major policy priorities in the extenders package and cuts spending. According to Senator Thune, the amendment would:
- Extend unemployment benefits until November, just as the current version does,
- Extend the expiring tax provisions,
- Include no tax increases,
- Fully pay for the bill with spending cuts including rescinding $37.5 billion in unobligated stimulus funding, and cutting $113 billion in unnecessary spending,
- And include an additional year of the “doc fix,” extending the payments through 2012 instead of 2011 under the current version.
Recent polling reveals just how serious the American people take the rapidly increasing federal debt. The time has come to listen to the American people, and the Thune amendment is a good place to start.