This Week on Capitol Hill

Congress is off to the races as a number of major legislative initiatives jockey for consideration on the floor of the House. While Funny Cide failed to win the Triple Crown in the mud at Belmont this past weekend, Congress is chomping at the bit with its own Trifecta: Spend, Spend Some More, and Spend Even More Than That.

Spend: Child Tax Credit Compromise

Listening to all the media chatter surrounding the child tax credit, you’d never realize that the recently passed tax bill actually takes 3 million American families off of the tax rolls entirely. You also probably missed that in 2001, President Bush created a new 10% tax rate for lower income workers, down from the old lowest rate of 15 percent, and that the 2003 tax bill moved even more families into the lower rate.

All of that doesn’t matter, because the left is getting traction and digging in the spurs on the child tax credit. At the end of last week, the Senate actually passed an expansion of the child tax credit by a vote of 94 to 2. It was only the state of Oklahoma that delivered clarity and principled thinking on this issue. The two no votes were the state’s Republican senators, Don Nickles and James M. Inhofe. According to the New York Times, Senator Inhofe issued a statement on Friday calling the bill “a redistribution of taxpayers’ money to those who do not pay taxes.”

For everyone not from Oklahoma, the vote was a sorry moment, and it was driven by political fear. The way the Senate has expanded the tax credit, more people who are not paying taxes will receive a refund through the tax code. This is a kind of welfare, not a tax cut. You cannot get a tax cut if you do not pay taxes. However, the issue is confusing because it is embedded in the tax code, and it will be very easy to run a 30 second political attack ad bashing Senators for refusing to “cut taxes” for lower income Americans.

All evidence shows that Washington is completely caving in on this issue. President Bush is taking a walk, and with that, the House will probably vote to quickly and quietly put it to rest, and hand out another $10 billion of your money under the guise of a “tax cut.” In reality, this is another new outlay and more evidence that Congress and the President remain unwilling to stop the spending madness.

Spend Some More: Appropriators Gear Up on Spending Battles

Passing new spending through the tax code is actually the least of our worries. The regular summer spending season—the Appropriations Process—starts this week as the White House and Congress begin to game the system with gimmicks to allow more spending than ever. The President laid down a marker earlier this year, calling for spending growth of no more than 4 percent, and even with that the budget resolution for fiscal year 2004 calls for a staggering $784.7 billion in appropriations spending. Yet, Congress is so addicted to spending that it may be incapable of hitting even this soft target.

According to Congress Daily, Congressional negotiators are working on a deal with the White House described as “a fund-shifting plan” to somehow free up $5 billion from 2003’s record-breaking spending year. We don’t know any details yet, but taxpayers, get ready to run for the hills, because in Congress “fund-shifting” usually means a shift from your wallet to theirs.

Spend Even More Than That: Medicare Drug Benefit Looks Increasingly Likely

Republicans control the House, the Senate, and the White House, but somehow Senator Ted Kennedy has again remerged as the dealmaker on a Medicare bill. Under Senator Kennedy’s leadership, there is now a broad consensus to create a new pharmaceutical drug benefit for Medicare program recipients. This will amount to about $400 billion in new spending over the next 10 years.

Adding a drug benefit to the current Medicare program is insane. The program is flat broke, running a multibillion dollar deficit while costs are spiraling. The only way a drug benefit will make sense is if the Senate uses it to bring reform and competition to the outdated Medicare program structure. The question is how willing the Senate will be to create a bill that actually provides real choices for senior citizens. President Bush offered a dramatic reform proposal earlier this year, but Congress didn’t bite. With the President use some of his power to shape the debate this week?

Either way, Senate Majority Leader Bill Frist, a doctor who has some good ideas on Medicare, wants to have a bill on the floor of the Senate as early as next week. But the real action is this week with the backroom deal-making already underway with Senator Kennedy.