Tag: federal budget

Senate “Gang” considers using new revenues to reduce federal deficits

October 5, 2012 at 12:25 pmCategory:NC Budget and Tax Center

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Earlier this week, the New York Times reported the efforts of a new bipartisan “gang” in the U.S. Senate to hammer out a framework for federal deficit reduction prior to the upcoming lame duck session of Congress. Along with grappling with long-term federal deficits, the gang is looking to address the looming fiscal challenges associated with the expiration of tax cuts passed under Presidents Bush and Obama and the threat of sequestration, the across-the-board spending cuts to critical defense and non-defense programs set to begin taking effect in January.

While the broad outlines seem encouraging, particularly the commitment to finding new revenues through tax reform, there are some concerns in the emerging framework that need to be addressed.  Along with ensuring that Medicare and Social Security benefits remain stable, perhaps the most pressing issue involves the ways in which the gang actually plans to find these new revenues.

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Another bipartisan voice for new revenues in federal deficit reduction package

September 26, 2012 at 4:30 pmCategory:NC Budget and Tax Center

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In their appearance at Wake Forest last night, Erskine Bowles and former Senator Alan Simpson presented their long-standing plan for federal deficit reduction and joined their voices to the growing bipartisan chorus reiterating the importance of finding a balanced approach to long-term federal deficit reduction that includes new revenues and targeted spending cuts.

While the Simpson-Bowles plan isn’t perfect, it represents a reasonable starting point for “putting everything on the table” when it comes to federal deficit reduction, and especially the importance of including new revenues.  It opens the door to a fiscally responsible alternative to the spending-cuts only approach to budgeting embodied in sequestration—the looming $1.2 trillion in across-the-board spending cuts to federal programs like Head Start, education, R&D, and our nation’s military projected to cost North Carolina thousands of jobs.

Congress should build upon the Simpson-Bowles plan by replacing these sequestration cuts with new revenues created by allowing the Bush tax cuts on incomes over $250,000 per year to expire in January. This approach will negatively affect just 1.4% of North Carolina’s families by reducing their tax cut and will generate more than $1 trillion in new revenues by 2023—an important down-payment on reducing the Federal budget deficit.

We’re all in this together: The Truth About Federal entitlement spending

September 22, 2012 at 6:00 amCategory:NC Budget and Tax Center

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Across North Carolina and the nation at large, we’re seeing a fundamental policy debate playing itself out, which boiled down to its essence asks a single, critical question: Do government benefits promote dependency among those who receive those benefits, or do they promote personal responsibility and a common baseline opportunity for all Americans?

The big picture answer is that everyone benefits from our government’s spending on things like schools, roads, public health.  But the narrower part of this debate focuses on entitlement spending who receives it and what is required in exchange for these supports.  As a recent study makes clear, over 90% of entitlement spending benefits like Medicare, Social Security, and SNAP go to Americans who are either working, paying into the system, have paid into the system in the past, or have disabilities.  This spending provides a critical support that promotes the ideal that we’re all in this together.

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Experts, policy makers agree: Federal spending cuts bad for North Carolina’s economy

September 14, 2012 at 3:21 pmCategory:NC Budget and Tax Center

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Now that policy makers are starting recognize that spending cuts hurt economic growth and contribute to job losses, it’s worth revisiting the looming threat to our state’s economic recovery posed by sequestration cuts to federal defense and non-defense programs.  While it’s clear that the sequestration cuts to Pentagon programs will hurt North Carolina’s economy, a recent report commissioned by the Aerospace Industries Association finds that cuts to non-defense programs will hurt as well.

Over the past few months, we’ve started to hear a lot about “sequestration”— $1.2 trillion in automatic, across-the-board spending cuts to the Pentagon and other federal programs like education, nutrition, healthcare, and research and development scheduled to phase in over the next decade if Congress is unable to agree on a deficit reduction package by the end of this year.

While the $600 billion in defense spending cuts—$60 billion of which take effect in January—would undoubtedly hurt North Carolina’s economy, and especially military communities like Fayetteville, and Jacksonville, the report finds that cuts to non-Pentagon programs will likely have an even more damaging impact, since military and non-military families alike rely on federal assistance with child care, education, Head Start, and the R&D dollars that support the state’s strengths in higher education and technology.

The AIA study suggests that such an approach is a bad deal for North Carolina’s economy, specifically finding that the sequestration cuts to nondefense spending would inflict almost double the economic harm as the proposed Pentagon spending cuts and would reduce the U.S. gross domestic product during over the next decade by a greater amount ($77.3 billion) than cuts to defense spending ($72.1 billion).

 

Instead, Congress should take a balanced approach to deficit reduction by including new revenues, rather than relying solely on spending cuts to close the federal budget deficit.

Which tax plan will impact your life the most?

August 17, 2012 at 3:11 pmCategory:NC Budget and Tax Center

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When Congress returns from its August recess next month, it faces the critical business of addressing the more than $5 trillion in tax packages signed under President Bush and President Obama set to expire in January 2013.

Before leaving town, the US House and the US Senate each managed to pass legislation extending these tax breaks, but these two plans treat the middle class very differently.  The Senate version extends tax cuts for 98% of Americans for one year, while eliminating tax breaks on incomes over $250,000—a provision which will reduce the Federal budget deficit by $1 trillion and only affects 2.2% of North Carolina’s residents.

The House-passed version, on the other hand, embodies very different priorities.  It keeps in place the tax cuts for incomes over $250,000 for another year, while eliminating tax credits for more than 13 million low- and middle-income working Americans. In effect, the House-passed plan finances big tax breaks for the wealthy by asking the middle class to contribute more.

These two plans could not be more different, and the Center for Tax Justice recently launched a new tax calculator to help Americans see for themselves just how dramatic these differences are. 

But an important aspect that isn’t captured in the calculator is the impact on our lives—beyond each of our own pocketbooks.  In fact, given the revenue that would be lost under the House-passed plan in one year alone, there would be fewer dollars to invest in our state’s infrastructure for business and everyone’s wellbeing, educating our children, and feeding housebound seniors for example.  The loss of these investments must be part of our calculation of how each proposal will impact our lives.