Will latest jobs bill really produce jobs?

In the January 3, 2010 article "Will latest jobs bill really produce jobs?," Associated Press writer Jim Abrams outlines opposing sides in the Congressional battle over U.S. government efforts to increase employment:

WASHINGTON – When the Senate takes up a jobs bill later this month or early in February, the debate will center on whether it really will create jobs and be worth plunging the government tens of billions of dollars further into debt.

Republicans scoff at the "Jobs for Main Street Act" title that House Democrats put on their $174 billion package last month. They refer to it as "son of the stimulus," the $787 billion economic recovery plan of nearly a year ago that they say was ineffective at producing jobs.

In its last vote of 2009, the House narrowly passed the bill, 217-212, without a single Republican supporter.

Democrats tick off the job prospects from the House bill's $75 billion in infrastructure and public sector spending: tens of thousands of new construction jobs, 5,500 more police officers, 25,000 additional AmeriCorps members, 250,000 summer jobs for disadvantaged youth, 14,000 part-time jobs for parks and forestry workers.

"Why don't we just put everyone in the United States on the federal government payroll and call it a day?" counters Rep. Jerry Lewis, R-Calif.

House Democrats diverted $75 billion from the Wall Street bailout fund to offset some of the costs. Opponents said that amounted to a shell game because unused bailout money is supposed to be used to reduce the deficit, which hit $1.4 trillion in the 2009 budget year.

The Senate, however, has less of an appetite for another costly round of economic stimulus measures, particularly with a vote on tap for Jan. 20 to again raise the ceiling on the government's total debt just a month after upping it to $12.4 trillion.

Conspicuously absent from the House plan were President Barack Obama's proposals to attack unemployment through tax credits for small businesses that create jobs and for homeowners who make their dwellings more energy efficient.

A job-creating tax credit for small businesses has support among some Democrats in the Senate, even though critics fear it may be too complex to work.

"Small business people have too much to do just to keep their businesses afloat to try and figure out some fancy, complex credit," Lawrence Lindsey, an economic adviser to former President George W. Bush, told a Democratic panel last month.

But Gene Sperling, an adviser to Treasury Secretary Timothy Geithner, said tax credits would empower growing small businesses.

"If these have even a marginal incentive on even a few ... employers, the bang for the buck in terms of job creation would be one of the highest of any of the types of incentives that we've had," Sperling said.

The job creation issue is complicated. Much of the money in the House bill goes to programs that may stimulate the economy but don't appear to directly put people to work.

There's $41 billion to extend unemployment benefits for six months and $12.3 billion to extend a health insurance subsidy for people who have lost their jobs. There's extension of a child tax credit for poor families, $23.5 billion to help states cover Medicaid costs and $23 billion so states can support some 250,000 education jobs over the next two years. An additional $2.8 billion goes to clean water and environmental restoration projects.

Even the investment in "shovel-ready" highway and bridge projects may not immediately translate into a reduction in the nation's 10 percent unemployment rate.

Republicans cited government figures showing that, as of Sept. 30, only 9 percent of $27.5 billion for highways in the first stimulus bill had been spent. The Congressional Budget Office estimates that of the $39 billion in the new House jobs bill directed to the departments of Transportation and Housing and Urban Development, only $1.7 billion will get spent before next October.

A lot of the money "hasn't even gotten out of Washington yet," said Rep. Eric Cantor of Virginia, the House's second-ranked Republican. "Why is it still here if it was designed to create jobs?"

Rep. James Oberstar, D-Minn., chairman of the House Transportation and Infrastructure Committee, said some 8,000 highway and transit projects — more than half those designated under last February's stimulus bill — are under way, creating or sustaining 210,000 direct jobs. When indirect jobs are included, that number reaches 630,000, he said.

The low federal spending rate, committee officials said, is because the treasury outlay comes at the end of the process, after the contractor bills the state and the state bills Washington.

Dan DuBray, spokesman for the Interior Department's Bureau of Reclamation, said his agency will have no problem putting to work the $100 million it would receive under the jobs bill to provide clean drinking water to rural areas. "Projects in Reclamation are much akin to planes waiting on the taxiway waiting to take off."

Matt Jeanneret, spokesman for the American Road and Transportation Builders Association, agreed that "a lot of jobs" have been saved by the stimulus act, although in many cases federal money is basically replacing lower levels of private or state investment. The unemployment rate in the construction industry remains at about 19 percent, almost double the national level.

The stimulus is "a needed shot in the arm, but the real solution is a long-term highway and transit investment bill," Jeanneret said. Congress has put off consideration of a six-year $450 billion infrastructure measure to replace the highway and transit act that expired in September.

The CBO has estimated that employment was 600,000 to 1.6 million higher in the third quarter of 2009 because of the stimulus act.
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Associated Press writer Ann Sanner contributed to this report.
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On the Net:
Information on the bill, H.R. 2847, can be found at http://thomas.loc.gov/
Congressional Budget Office: http://www.cbo.gov/
Background on the Jobs for Main Street Act: http://tinyurl.com/yz2ryx9

War costs, while high, are small part of U.S. budget deficit

In the December 6, 2009 Miami Herald article "War costs, while high, are small part of U.S. budget deficit," David Lightman says the "wars in Iraq and Afghanistan are not the main reason the publicly held national debt has doubled since the 2001 terrorist attacks."

WASHINGTON -- President Barack Obama insisted last week that as the nation confronts record government debt and pressing economic needs at home, it cannot afford a lengthy, ambitious nation-building effort in Afghanistan -- but limiting U.S. involvement is unlikely to make much of a dent in the record federal debt.

Liberals complain the war has been a big contributor to the nation's budget problems, and are insisting some way be found to pay for the buildup.

But the wars in Iraq and Afghanistan, though they have virtually all been funded by deficit spending, are not the main reason why the publicly held national debt has more than doubled -- from $3.339 trillion to $7.709 trillion -- since the Sept. 11, 2001, terrorist attacks.

"It's a small part of the deficit,'' said Todd Harrison, fellow in defense budget studies at the Center for Strategic and Budgetary Assessments, a Washington research group.

That's not to say the war costs don't matter.

"Over the short term, we are certainly spending a large chunk of money of the wars, money that could be devoted to other priorities or for deficit reduction, at least once the economy improves,'' noted Josh Gordon, policy director at the Concord Coalition, a bipartisan research group devoted to fiscal discipline.

But over the long term, he stressed, "Our fiscal challenges are substantially larger, and just ending the wars would not change those projections -- because they all assume peacetime budgets.''

Obama last week said he would deploy an additional 30,000 to 35,000 U.S. troops to Afghanistan. This year's expected $30 billion to $40 billion price tag for that should boost the total cost of wars in Iraq and Afghanistan past $1 trillion over the last nine years, according to the nonpartisan Congressional Budget Office (CBO).

That spending accounts for only about one-fifth of publicly held debt accumulated in that time.

National defense spending accounted for 20.7 percent of the federal budget last year. While that's higher than peacetime lows of around 16 percent in the late 1990s, it's less than the 26-28 percent annual shares between 1975, when U.S. involvement in Vietnam ended, and 1992, when first the Cold War and then the 1991 Gulf War ended.

What's driven the bulk of this decade's deficit boom has been spending growth in programs such as Medicare and Social Security. Human resources, which include those and other domestic programs, consumed 63.8 percent of the budget last year, compared to only 49 percent as recently as 1990.

The antidote to high deficits, say independent experts, is making tough choices on domestic spending and taxes.

"The purpose of a budget is to set priorities and make trade-offs,'' said Susan Tanaka, director of citizen education and engagement at the Peterson Foundation, a New York-based fiscal watchdog group.

STILL COUNTING

Since the U.S. invaded Afghanistan shortly after the 2001 terrorist attacks, CBO estimates the U.S. has spent $943.8 billion through Sept. 30, 2009, to meet war and war-related needs, and could spend another $1.6 trillion over the next decade -- no small sum, indeed.

Other estimates put the cost higher: A 2008 study by Nobel Prize-winning economist Joseph Stiglitz and Harvard University professor Linda Bilmes dubbed the conflicts the "$3 trillion war.''

That figure appears consistent with current spending levels, since it assumes the U.S. will continue to spend on the war and related activities through 2019, a mission CBO estimates could cost $1.6 trillion.

Also adding to the cost is interest on war-related debt; that has totaled at least $100 billion.

Interest on future debt and other indirect costs are difficult to calculate, such as the cost of replacing equipment and providing benefits and healthcare to military veterans and families.

Direct war costs dropped in 2009, to about $154 billion, after reaching $187 billion in 2008. The administration had sought $130 billion in fiscal 2010; the defense spending legislation is still pending in Congress; that figure is now likely to grow by at least $30 billion.

A small band of congressional liberals insists that too much is being spent on the war, and that it's driving up the national debt.

War spending "has contributed to our economic crisis, exploded the lid off our national debt, and diverted funds from desperately needed domestic priorities,'' said Rep. Lynn Woolsey, D-Calif.

"We believe that if this war is to be fought, it's only fair that everyone share the burden,'' said House Appropriations Committee Chairman David Obey, D-Wis., who had pushed for a war surtax.

The surtax effort was seen as more a political than a fiscal initiative.

"Look at who's pushing this. It's people opposed to the war,'' said Roberton Williams, budget analyst at the Urban Institute-Brookings Institution Tax Policy Center.

House Speaker Nancy Pelosi, D-Calif., sensing scant support for the surtax, effectively killed the idea on Thursday.

DROP IN THE BUCKET

The war cost will help boost a federal deficit that CBO estimates will reach $1.4 trillion this year, roughly the same as last year, and add to a total national debt that now tops $12 trillion when including debt held in government accounts. But Obama's extra $30 billion is only a drop in the $1 trillion, $400 billion deficit bucket.

CBO sees huge deficits ahead. Its latest projections show even with stricter fiscal policies and a reviving economy, federal deficits are expected to total $7.1 trillion over the next decade, still reaching $722 billion in fiscal 2019 alone.

Those projections assume a continuation of current war policies. Should troop levels decline "significantly'' over a three year period, as Obama hopes, the cost would drop to about $1.1 trillion over 10 years, or roughly $140 billion a year, which would still leave large deficits.

Most red ink ever: $9 trillion over next decade

In the August 26, 2009 article "Most red ink ever: $9 trillion over next decade," Associated Press writer Jim Kuhnhenn reports the new forecasts of upcoming U.S. federal budgets project larger deficits than previously expected:

WASHINGTON – In a chilling forecast, the White House is predicting a 10-year federal deficit of $9 trillion — more than the sum of all previous deficits since America's founding. And it says by the next decade's end the national debt will equal three-quarters of the entire U.S. economy.

But before President Barack Obama can do much about it, he'll have to weather recession aftershocks including unemployment that his advisers said Tuesday is still heading for 10 percent.

Overall, White House and congressional budget analysts said in a brace of new estimates that the economy will shrink by 2.5 to 2.8 percent this year even as it begins to climb out of the recession. Those estimates reflect this year's deeper-than-expected economic plunge.

The grim deficit news presents Obama with both immediate and longer-term challenges. The still fragile economy cannot afford deficit-fighting cures such as spending cuts or tax increases. But nervous holders of U.S. debt, particularly foreign bondholders, could demand interest rate increases that would quickly be felt in the pocketbooks of American consumers.

Amid the gloomy numbers on Tuesday, Obama signaled his satisfaction with improvements in the economy by announcing he would nominate Republican Ben Bernanke to a second term as chairman of the Federal Reserve. The announcement, welcomed on Wall Street, diverted attention from the budget news and helped neutralize any disturbance in the financial markets from the high deficit projections.

The White House Office of Management and Budget indicated that the president will have to struggle to meet his vow of cutting the deficit in half in 2013 — a promise that earlier budget projections suggested he could accomplish with ease.

"This recession was simply worse than the information that we and other forecasters had back in last fall and early this winter," said Obama economic adviser Christina Romer.

The deficit numbers also could complicate Obama's drive to persuade Congress to enact a major overhaul of the health care system — one that could cost $1 trillion or more over 10 years. Obama has said he doesn't want the measure to add to the deficit, but lawmakers have been unable to agree on revenues that would cover the cost.

What's more, the high unemployment is expected to last well into the congressional election campaign next year, turning the contests into a referendum on Obama's economic policies.

Republicans were ready to pounce.

"The alarm bells on our nation's fiscal condition have now become a siren," said Senate Minority Leader Mitch McConnell of Kentucky. "If anyone had any doubts that this burden on future generations is unsustainable, they're gone — spending, borrowing and debt are out of control."

Even supporters of Obama's economic policies said the long-term outlook places the federal government on an unsustainable path that will force the president and Congress to consider politically unpopular measures, including tax increases and cuts in government programs.

"The numbers today portend the biggest budget fight we've probably had in decades in the United States," said Stan Collender, a former congressional budget official.

The summer analyses by the White House budget office and by the Congressional Budget Office reached similarly bleak conclusions. The CBO's 10-year deficit figure was smaller — $7 trillion — but that is because it assumes that all tax cuts put into place in the administration of former President George W. Bush will expire on schedule by 2011. Obama's budget baseline, however, hews to his proposal to keep the tax cuts in place for families earning less than $250,000 a year.

Both budget offices see the national debt — the accumulation of annual budget deficits — as more than doubling over the next decade. The public national debt, made up of amounts the government owes to the public, including foreign governments, stood Tuesday at a staggering $7.4 trillion. White House budget officials predicted it would reach $17.5 trillion in 2019, or 76.5 percent of the gross domestic product. That would be the highest proportion in six decades.

Congressional Budget Office director Douglas Elmendorf said if Congress doesn't reduce deficits, interest rates are likely to rise, hurting the economy. But if Congress acts too soon, the economic recovery — once it arrives — could be thwarted.
"We face perils in acting and perils in not acting," Elmendorf told reporters.

David Walker, former head of the Government Accountability Office, said the numbers illustrated the need for a national commission that would review spending and taxing options and present lawmakers with a deficit reduction plan that Congress could approve or reject.

"We're going to have to do a hard course correction once we turn the corner on the economy," Walker, now president and CEO of the Peter G. Peterson Foundation, said.

Both Romer and Obama budget director Peter Orszag said this year's contraction would have been far worse without money from the $787 billion economic stimulus package that the president pushed through Congress as one of his first major acts.

At the same time, the continuing stresses on the economy have, in effect, increased the size of the stimulus package because the government will have to spend more in unemployment insurance and food stamps, Orszag said. He said the cost of the stimulus package — which spends most of its money in fiscal year 2010 — will grow by tens of billions of dollars above the original $787 billion.

The White House also credited the $3 billion cash-for-clunkers auto program for contributing to recent economic growth.

Orszag, anticipating backlash over the deficit numbers, conceded that the long-term deficits are "higher than desirable." The annual negative balances amount to about 4 percent of the gross domestic product, a number that many economists say is unsustainable.

But Orszag also argued that overhauling the health system would reduce health care costs and address the biggest contributor to higher deficits.

"I know there are going to be some who say that this report proves that we can't afford health reform," he said. "I think that has it backward."

At the same time, 10-year budget projections can be "wildly inaccurate," said Collender, now a partner at Qorvis Communications. Collender noted that there will be five congressional elections over the next 10 years and any number of foreign and domestic challenges that will make actual deficit figures very different from the estimates.

David M. Walker, the former Comptroller General of the United States, holds a B.S. degree in accounting from Jacksonville University.

U.S. housing, confidence data point to recovery

According to the August 25, 2009 article "U.S. housing, confidence data point to recovery," Ros Krasny reports recent economic data suggest the current economic decline may be ending:

CHICAGO (Reuters) – Larger-than-expected gains in U.S. housing prices and consumer confidence on Tuesday lent new weight to views that the economy is emerging from the longest recession since the 1930s.

U.S. single-family home prices rose for the second month in a row in June, according to a closely watched index, and consumer confidence jumped in August.

In addition, President Barack Obama nominated Ben Bernanke to a second term as chairman of the Federal Reserve, removing some niggling doubt from investors' minds. The move promised a consistent approach to monetary policy in the years ahead.
The developments helped buffer the blow of projections for the U.S. budget deficit to reach its highest level in 2009, relative to the total economy, since World War Two.

"The recession appears to be over, with consumer attitudes lagging behind broad economic developments," said Steven Wood, chief economist at Insight Economics in Danville, California.

Major U.S. equities indexes closed higher after briefly hitting new 2009 highs on the day's events. Treasury bond prices initially fell as signs of a resurgent economy reduced interest in safer investments, but later rose after decent demand for an auction of two-year notes.

The Conference Board, an industry group, said consumer confidence climbed to a reading of 54.1 in August from 47.4 in July, handily beating forecasts, on an improved outlook for the job market and the overall economy.

The rise sent the index to its highest level since May. Still, some analysts warned not to get carried away.

"Confidence remains well below its historical average of 95 and it has not even regained the level of 61 seen before the collapse of Lehman almost a year ago," said Paul Dales, U.S. economist at Capital Economics in Toronto.

The weak labor market remains a sticking point to recovery, and especially a revival in consumer spending. Even the Fed has conceded the likelihood of a "jobless recovery," with the unemployment rate staying high long after growth resumes.

Americans saying that jobs were "hard to get" in August dropped to 45.1 percent from 48.5 percent but only 4.2 percent said jobs were plentiful.

"Most of the strength was in the 'expectations' component, so it looks like even though the near-term conditions are still a bit rocky, there is hope for the future," said Kim Rupert, managing director, global fixed income analysis, Action Economics LLC in San Francisco.

HOUSING PRICES IN BROAD-BASED GAINS

Other data supporting recovery hopes came from the Standard & Poor's/Case-Shiller housing price index. The housing market is considered a critical component to an economic recovery.

Prices of U.S. single family homes rose by 1.4 percent in June from May, after creeping up by 0.5 percent in April, suggesting the crippling housing slump is easing.

The Case-Shiller 10- and 20-city indexes have plunged by 54.3 percent and 45.3 percent, respectively, from their 2006 peaks.
June's improvement was broad based, with 18 of 20 metropolitan areas logging gains for the month.

"The most important take-away is the breadth of the rise," said Adam York, economist at Wells Fargo Securities in Charlotte, North Carolina. "The absolute worst is behind us."

Separately, the Federal Housing Finance Authority said U.S. home prices rose by 0.5 percent in June, according to its seasonally-adjusted monthly index, while prices fell by 0.7 percent in the second quarter.

"The S&P/Case-Shiller report dovetails with evidence from the FHFA house price index and the National Association of Realtors existing home sales report, suggesting that house price deflation has bottomed," said Anna Piretti, economist at BNP Paribas in New York.

BEN'S BACK

Bernanke's reappointment, while widely expected, was seen as a plus for markets that feared new uncertainty at a time the U.S. economic ship is finally righting itself.

Fed officials have warned that politicizing the U.S. central bank risked higher long-term interest rates as investors began to fear higher inflation taking root.

"Were Bernanke to be denied a second term in favor of, say, a current White House 'insider,' this would inevitably add to concerns about the blurring of lines between fiscal and monetary policy and the potential compromising of Fed independence," said strategists at analysis firm 4CAST Ltd.

For the time being, though, Bernanke & Company still face deflationary pressure from the huge "output gap" in the U.S. economy created by the deep recession.

"The news that the deflation-conscious Bernanke is going to be at the helm .... provides tentative support to our view that the zero-interest rate policy will remain in place until 2011 at the earliest," said Capital Economics' Dales.

The nonpartisan Congressional Budget Office (CBO) on Tuesday gave updated projections on the likely U.S. budget deficit in fiscal 2009 and beyond.

Spiraling deficit forecasts stretching far into the future have been cited as one element behind a dip in Obama's polling numbers, as Americans start to fear that tax hikes will almost inevitably follow.

The CBO forecast a fiscal 2009 deficit at $1.59 trillion, or 11.2 percent of projected gross domestic product, falling to $1.4 trillion or 9.6 percent of GDP in 2010.

It gave a 10-year deficit forecast of $7.14 trillion against $9.1 trillion.

Separately, the White House raised its forecast for the budget deficit between 2010 and 2019 to a total of about $9 trillion.

Separating Fact From Fiction In Health Care Debate

According to the August 7, 2009 story "Separating Fact From Fiction In Health Care Debate" on National Public Radio (NPR):

The battle over health care is sparking claims on both sides, but many of the assertions being made twist the facts and others are outright false, says the editor of a Web site that tracks the claims.

Bill Adair, editor of PolitiFact and the Washington bureau chief for the St. Petersburg Times, tells Melissa Block that one group that opposes an overhaul says the health care bill allows illegal immigrants to get free medicine.

"We gave that our lowest rating on our Truth-O-Meter: a pants on fire," he says. "To the contrary, there's language [in the bill] that says that undocumented aliens would not be eligible for the credit under this plan."

The claim came from a chain e-mail that included many other assertions, including one that said a "health choices commissioner" would decide health benefits and that individual consumers would have no choices. This claim, too, got a "pants on fire" from PolitiFact.

"This chain e-mail is very persuasive in many ways because it has specific language, page numbers from the bill, but when you look at what it uses to back up a claim like that, it's just not true," Adair says. "There is a health commissioner that would be responsible for running the exchange under the main bills that have been discussed, but it's not like that person would say you couldn't get coverage or you could. That person would just be responsible to administer what the general standards were for the programs."

Bogus claims aren't just coming from those who oppose an overhaul. Democratic Rep. Russ Carnahan of Missouri recently claimed that the Congressional Budget Office estimated the current plan would create a $6 billion surplus over 10 years. Adair's group has rated that as false.

"That really was a little bit of budget trickery there," he says. "He is wrong that the CBO said this. The CBO said that the health care plan would post a deficit of something like $239 billion, something like that.

"What he's doing is including some other numbers to try to erase that and actually make it look like a $6 billion surplus, but that's not what the CBO says."

Adair says that because much of the action in the health care debate has been on the side of the groups that oppose an overhaul, that side is also responsible for much of the misinformation.

"I think much of the dialogue is being set by the critics who are making some very strong claims about this, and when we check them out, we find that many of them are exaggerated or completely false," he says.

Obama Plan to Pay for Health Care Reform

According to a June 13, 2009 article by Josh Gerstein in Politico:

President Barack Obama says he's now found savings that will pay almost all the costs of a massive overhaul of America's health care system.

Obama on Saturday is announcing an additional $313 billion in new proposed savings that he says would bring the total funding available for his top-priority health insurance reform to nearly $950 billion over 10 years.

White House officials insisted the new savings were rock-solid, but also acknowledged they had yet to settle on a specific mechanism to achieve lower prescription drug costs that make up nearly one-quarter of the new savings.

“Any honest accounting must prepare for the fact that health care reform will require additional costs in the short term in order to reduce spending in the long term,” Obama says in his weekly radio and Internet address. “Today, I am announcing an additional $313 billion in savings that will rein in unnecessary spending, and increase efficiency and the quality of care.”

The new proposals from Obama came as the drive for health care reform reaches a pivotal juncture in Congress. On Monday, the Senate Finance Committee is scheduled to receive Congressional Budget Office estimates on a slew of health-care options. On Wednesday, the committee is expected to unveil proposed legislation.

In advance of those milestones, the White House was moving aggressively to counter public criticism that funding plans for the health reform effort are unrealistic, particularly in the face of an expected 10-year pricetag of $1 trillion or more. Some analysts have faulted the White House for being overly optimistic about savings and tone-deaf to which tax-raising proposals are likely to fly in Congress.

In his address Saturday, Obama refers to a 10-year total of more than $600 billion in “savings” for health care. However, he does not explain in his latest comments that, under his revised budget released last month, $326 billion of that amount would come from tax hikes on Americans making over $250,000 a year, “loophole closers,” and higher fees for some government services.

In a conference call with reporters Friday, Office of Management and Budget Director Peter Orszag said the latest announcement signaled that the White House had met its obligation to identify funding sources for a broad-based effort to make health insurance more affordable and more widely available.

“We are making good on this promise to fully finance health care reform over the next decade,” Orszag declared.
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The bulk of the new $313 billion in savings would come from cutting or reducing the growth of payments to hospitals, medical equipment manufacturers and laboratories — though the major cuts don't target doctors, Orszag said.

Over the next decade, $110 billion is slated to come from reducing reimbursements to take account of what Orszag described as the ability of providers to improve their efficiency. “Health care services should be able to achieve and do achieve productivity improvements over time,” he said. According to a fact sheet released by the White House, future increases in such Medicare payments would be reduced based on an assumption that health care providers achieve half the productivity increases seen elsewhere in the economy. The budget official said the reductions would take place even if providers failed to garner the projected efficiencies.

Another $106 billion would come from cuts in so-called disproportionate share payments the federal government makes to hospitals with large numbers of uninsured patients. “As the ranks of uninsured decline under health reform, those payments become less necessary,” Orszag said.

About $75 billion is slated to come from lower payments for prescription drugs. However, Orszag said the White House was “in
discussions with stakeholders over the best way of achieving that $75 billion.”

Notwithstanding that ambiguity, Orszag asserted that the White House had put forward $950 billion in budgetary offsets that could be use to fund health reform. He called the proposals "hard" and "scoreable," meaning that they were sufficiently certain and specific to pass muster with CBO officials who formally tally the cost of budget items.

Asked about the discrepancy, Orszag said, “There’s been continuous skepticism that we will come forward with detail….The detail on the $75 billion for prescription drugs will be forthcoming in the very near future and I will rest my reputation as a former CBO director on the fact that there are multiple ways in which those savings can be achieved and we are committed to achieving that level of savings in this package.”

There were signs that the announcement of the additional $313 billion of savings may have been rushed. In addition to the vagueness about the $75 billion in lower drug costs, the White House’s health care reform coordinator, Nancy-Ann DeParle, did not join a conference call with reporters to announce the new proposals. Her presence had been advertised in advance, but a spokesman said she was in another meeting and could not participate.

The cuts and savings are likely to engender warnings from providers that de-facto rationing will occur as patients in some areas find themselves unable to find providers willing to perform lab tests, X-rays and the like, due to the lower reimbursement rates.

Hospitals are also likely to protest that the disproportionate share payments, which are targeted for cuts of 75 percent, are vital to maintaining hospitals in costly urban centers, and to keeping teaching hospitals viable.

“It is unlikely to be an exact match on a hospital-by-hospital basis but what we believe will occur is that the remaining DSH payments that will still exist can be better targeted to the hospitals most in need,” Orszag said.

Americans' Tax Burden Near Historic Low

In the April 16, 2009 Washington Post article "Americans' Tax Burden Near Historic Low," Lori Montgomery says the effective tax rate in the U.S. is barely above its 2003 all-time low.

As thousands of anti-tax protesters rallied across the nation yesterday and the president promised tax cuts for most, new data showed that the federal income tax burden is already hovering near its lowest level in three decades for all but the wealthiest Americans.

The nonpartisan Congressional Budget Office estimates that the average family forked over barely 9 percent of its earnings to the IRS in 2006, the most recent year for which information is available. The effective tax rate hit its all-time low in 2003 and has since crept up only slightly.

Middle-class families -- to whom President Obama has delivered even more tax relief since he took office in January -- have fared especially well, according to the CBO. The middle fifth of taxpayers, who earned an average of $60,700 per household in 2006, paid just 3 percent in federal income tax that year, down from a high of 8.3 percent in 1981.

With federal income taxes so low for so many families, a majority of those surveyed by Gallup last week said the amount of federal income taxes they pay is either "too low" or "about right," compared with 46 percent who said their tax bills are "too high" -- one of the most positive assessments of the federal tax burden since Gallup began asking the question in 1956.

Gallup analysts said the poll results may also reflect confidence in Obama's pledge not to raise taxes on families making less than $250,000 a year, a vow he repeated yesterday in a tax-day speech at the Old Executive Office Building. Obama presented nine taxpayers who he said were better off because of tax breaks enacted in the recent economic stimulus package, including a tax credit for working families worth up to $800 this year.

"We start from the simple premise that we should reduce the tax burden on working people, while helping Americans go to college, own a home, raise a family, start a business and save for retirement," Obama said. "Those goals are the foundation of the American dream, and they are the focus of my tax policy."

Still, thousands of protesters marked the day federal income taxes were due by attending hundreds of "tea parties" from Florida to Hawaii, organizers said. The rallies were promoted by FreedomWorks, a conservative nonprofit group led by Richard K. Armey, a lobbyist and Texas Republican who once served as House majority leader.

In a pre-rally telephone interview from Atlanta, where he was preparing to speak on the steps of the statehouse, Armey conceded that "the federal tax rate right now is at a good level." But, he said, "there are very few people who believe Obama will be content to leave it at that."

Armey said the real target of the protesters' ire is not the current tax rate but the much higher one that will be needed to pay for trillions of dollars in financial-sector bailouts; the stimulus package, which is projected to add nearly $800 billion to the federal debt over the next 10 years; and Obama's ambitious health-care and education initiatives, which are projected to raise the debt by trillions of dollars more.

"There's no way he can do the spending he does and cut taxes for most people," Armey said. "People know that spending inevitably means more taxes."

The White House stuck to its own low-tax message yesterday, as Obama repeated his "clear promise that families that earn less than $250,000 will not see their taxes increase by a single dime." Asked whether Obama is confident that he can stick to that pledge throughout his administration, press secretary Robert Gibbs told reporters: "He is. He is. He is."

To add heft to that promise, the White House released a lengthy list of tax breaks included in the stimulus package to benefit college students, car buyers, first-time home buyers, families with children, poor people and others -- all told, about 120 million households.

Overlooked was one big drawback for the nation's finances: More people are likely to pay no income taxes at all.

According to the most recent IRS statistics, about 45 million households -- a third of all filers -- owed no federal income tax after taking their credits and deductions in 2006. This year, with the profusion of new credits in the stimulus package, about 65 million households -- or 43 percent of all filers -- are likely to owe no income taxes, according to a new analysis by the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution.

Of course, even filers who have no income tax liability still pay federal taxes, due in large part to the payroll tax, which funds federal insurance programs like Social Security. According to the CBO, taxpayers shelled out an average of 7.5 percent of their earnings in payroll taxes in 2006.

But if the recession lingers and Congress and the White House consider another economic stimulus package, that tax could temporarily disappear, as well. Economists say one of the first items that should be considered is a payroll-tax holiday.