Dec. 29, 2005 – An analysis by a progressive research organization predicts that soon to be enacted tax and budget cuts may further erode the standard of living for low- and middle-income people and leave the United States in worse economic shape.
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- Medicaid Faces Chopping Block to Pay for Military, Tax Breaks (May 5, 2005)
- Lawmakers Continue Pushing Cuts to Social Spending, Taxes (Oct 11, 2005)
- House Committee to Examine Tax Cuts Today (Nov 15, 2005)
The Center on Budget and Policy Priorities (CBPP), a think tank focusing on the needs of low-income people, has found that the recently passed tax cuts and soon-to-be approved budget cuts will overwhelmingly benefit more affluent people and corporations. Meanwhile, the congressional economic policy is slated to feed a deficit that could top $150 billion in ten years. The CBPP report is based on an analysis of information provided by the centrist Urban Institute-Brookings Institution Tax Policy Center.
Topping the CBPPâ€™s list of concerns are reductions in taxes enacted during the administration of George H.W. Bush that were aimed at alleviating the deficit. The cuts to those taxes were approved with the 2001 tax-cut package and go into effect at the beginning of 2006, alone carry a $27 billion price tag over the next five years. The cost of the cuts quintuples during the five years after that.
Last week, the Senate approved a budget package that will make significant cuts to funding for entitlement programs such as Medicare, Medicaid and family welfare. By a vote of 51-to-50, the Senate approved the bill, with Vice President Dick Cheney casting the tiebreaking vote.
Among the cuts are $16 billion to Medicaid over ten years, in the form of co-payment and premium hikes and reductions in benefits. Another $1.5 billion will be cut from child-support enforcement and $343 from foster-care funding.
In total, the Senate-approved package would add $39.7 billion to the federal budget over the next five years, an amount significantly less than the total the government will forfeit through the combination of tax cuts going into effect beginning January 1.
"The cost of these two tax cuts between 2005 and 2010 exceeds the savings from all of the reductions in low-income programs in the reconciliation bill over the same period," CBPP said in the report. "In other words, if Congress halted the implementation of these two tax cuts and eliminated all of the low-income program reductions, there would be a net reduction in the deficit."
None of the cuts to entitlement programs are guaranteed. The House of Representatives must approve the Senate-passed budget reconciliation passage before they take affect. Likewise, Congress could rescind the two tax cuts slated for enactment on January 1, an action CBPP and other groups are calling for.