Number of journalists killed in Iraq this month.
Fiscal Insanity: Paying for Tax Cuts With More Tax Cuts
Last year, in a supposed effort to impose some fiscal discipline, Congress limited itself to $70 billion in tax cuts over 10 years in the tax package currently under consideration in Congress. But the bill put together by conservatives includes far more than $70 billion in tax cuts over ten years, mostly for the wealthy, and they figured out an inventive way to get around the limit: more tax cuts.
Here’s how it works. Traditionally, very wealthy people are not eligible for an extremely tax-favorable kind of retirement account called a Roth IRA. As a revenue raising gimmick, Congress decided to remove the income restrictions on Roth IRAs for one year (2010). In the short term, these wealthy people will switch from their current retirement accounts to the Roth IRA, providing a quick influx of $6.9 billion to the treasury during the 10 year window. (The money is taxed when it is transferred.)
But over the long term, this shift will swell the federal debt even more. Once the money is transferred to Roth IRAs, it is never taxed again. Overall, the treasury “would lose $37 billion in revenue from the Roth IRA provision from 2013 to 2049.”
The measure passed the House yesterday and is expected to clear the Senate today. Of course, whatever problems this kind of policy creates in the future, we can always solve them with more tax cuts.
ThinkFast: May 11, 2006
Cunningham scandal expands: “Federal prosecutors have begun an investigation” into powerful House Appropriations Committee chair Jerry Lewis (R-CA). The probe is focusing on Lewis’ connections to “longtime friend” and lobbyist Bill Lowery. “As chairman of the Appropriations panel, Lewis has earmarked hundreds of millions of dollars in federal contracts for many of Lowery’s clients.”
The National Security Agency has been “secretly collecting the phone call records of tens of millions of Americans, using data provided by AT&T, Verizon and BellSouth.” The goal of the program, created shortly after 9/11, is “to create a database of every call ever made” within the nation’s borders. “Among the big telecommunications companies, only Qwest has refused to help the NSA.”
The Justice Department’s Office of Professional Responsibility has closed its investigation into the Bush administration’s warrantless domestic surveillance program because investigators were “denied the security clearances needed to conduct a probe.” Rep. Maurice Hinchey (D-NY) called the denial of clearances “hard to believe.”
A draft Government Accountability Office report finds that only “one one in five Iraq and Afghanistan war veterans who screen positive for combat-related stress disorders are referred by the Pentagon for mental health treatment.”
House conservatives gave Rep. Bob Ney (R-OH), who is better known as “Representative #1” in the Abramoff court pleadings, “a standing ovation after he told them yesterday that he has no plans to resign and will vigorously fend off a likely federal indictment.” Read more
