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Sunday, September 04, 2005

Will Katrina Deter the GOP Tax and Social Security Reform Agenda?

Senate Majority leader Frist’s office says estate tax reform remains on the agenda for next week, though they are flexible enough to return to Katrina should that be needed.  Others are saying that even if reform is delayed slightly, an extra Friday or two, the agenda is not fundamentally altered.  But there are members of the GOP who aren’t as certain about the wisdom of moving forward on reform of any type in the wake of Katrina:

GOP Agenda in Congress May Be at Risk, by Jonathan Weisman, Washington Post: Republican leaders intended to return to work with a dream agenda for small-government conservatives: permanent repeal of the estate tax, an extension of deep cuts to capital gains and dividend taxes, the first entitlement spending cuts in nearly a decade, and the advent of private investment accounts for Social Security. But Congress and the White House are on the spot to respond to Hurricane Katrina's historic Gulf Coast destruction and skyrocketing gasoline prices, and the leadership is feeling pressure to set aside or jettison parts of that well-laid agenda. The federal budget already is stretched by spending on the war in Iraq and a nearly $11 billion emergency hurricane relief package ... GOP leaders will have to justify additional tax relief for upper-income people at a time of civil and economic crisis.

"How do you do tax cuts when your budget is straining to save lives?" asked Rep. Mark Foley (R-Fla). The Ways and Means Committee on which Foley serves had been set to pass a package of tax cuts and spending cuts by the end of September, followed by broad, controversial Social Security legislation. Katrina "is going to have a tremendous impact," he added. House Majority Whip Roy Blunt (Mo.) said he has every intention of pushing forward with the tax and spending cuts and Social Security legislation. Hurricane-related legislation will not be controversial and "may mean we work on a Friday or two," he said. Asked at a news conference whether tax cuts are wise when the government is pouring billions of dollars into emergency aid, Blunt replied: "I think we need to look at what we need to do to be sure that the economy isn't affected more than it needs to ... We'll be thinking about that." ... Marshall Wittmann, a former Republican political strategist now with the centrist Democratic Leadership Council, said the GOP agenda looks like "political suicide." "The entire fiscal landscape has been transformed in the last week," Wittmann said. "The entire Republican agenda of tax cuts, Social Security reform and big spending on pet Republican projects is over...

Amy Call, a spokeswoman for Senate Majority Leader Bill Frist (Tenn.) said the plan is still to move to legislation repealing the estate tax this week. "However, we remain willing and able to return to Katrina business at any time," she said... Rep. E. Clay Shaw Jr. (R-Fla.), a Ways and Means member, said some tax cut plans will have to change. Bush's push to add private investment accounts to Social Security is also all but lost...

...Lawmakers and aides say relief spending could easily double the $10.5 billion that Congress hastily approved as part of a relief package. And it will not be for the immediate hurricane victims only. Rep. Ray LaHood (R-Ill.) said he will push for assistance to Midwestern farmers, hurt by drought and now by grain prices that have plunged on word that grain harvests cannot be shipped down the Mississippi ... Republican Sens. Olympia J. Snowe and Susan Collins of Maine requested $900 million in emergency heating assistance to defray surging heating oil costs. Another priority is likely to be surging gasoline prices ... Rep. Joe Barton (Tex.), chairman of the House Energy and Commerce Committee … push legislation to address the glaring inadequacies of the energy infrastructure, especially pipelines and refineries that were shuttered in the wake of Katrina. Finally, he said, "if there is a silver lining in this," it will be renewed political impetus to expand oil exploration beyond the Gulf region, especially in Alaska's Arctic National Wildlife Refuge.

None of that will necessarily mean the abandonment of tax cutting and cuts to Medicaid, student loans, farm price supports and other popular programs. Conservative activists hotly denied that there had been any slackening of will. "I don't think Republicans will be fooled into taking this necessary spending and using it to oppose pro-growth tax cuts," said Grover G. Norquist of Americans for Tax Reform...

The senate realizes something Katrina related might come up.  Frist’s office says they are ready to deal with anything that does, and Blunt believes it might take as much as a Friday or two.  But it does not sound like there are any plans to investigate the federal, state, or local preparedness or response, or to set aside time to address needs arising in Katrina’s wake.  If it were up to me, I’d set aside time now, and a single week shortened by a holiday does not seem excessive to deal with the aftermath of this tragedy.  In my opinion, and you are welcome to express yours, estate tax and other reform can wait until we are absolutely sure the needs of all of those affected by Katrina are fully addressed.  First things first.

    Posted by on Sunday, September 4, 2005 at 03:33 AM in Economics, Income Distribution, Politics, Social Security, Unemployment | Permalink  TrackBack (0)  Comments (11)

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