White House to Hunt for New Tax Revenues

[I AM NOT THAT GUY 5,715]

WASHINGTON -- The White House said it would launch a search for new tax revenues, as Congressional leaders moved to scale back proposed spending increases and tax cuts in President Barack Obama's ambitious budget.

The Obama administration plans to create a task force to consider elimination of corporate loopholes and subsidies, tougher enforcement against tax avoidance, and tax simplification, White House Budget Director Peter Orszag said late Tuesday.

Mr. Obama's budget proposal began the process of addressing problems such as the tax gap, the difference between taxes owed and taxes collected. "The question is whether we can be even more aggressive" in those areas, Mr. Orszag said in an interview late Tuesday. The task force will be run through a White House advisory board being headed by former Federal Reserve Chairman Paul Volcker, Mr. Orszag said.

No target for a dollar figure has been set. But the effort theoretically could lead to tens of billions of dollars in additional collections. The tax gap alone is estimated at $300 billion a year, of which more than $100 billion is believed to be collectible, according to IRS statistics.

By congressional estimates, annual spending on basic government services -- programs other than defense and entitlements -- would rise by more than 10% in fiscal 2010 under the $3.6 trillion Obama plan. Sen. Kent Conrad (D., N.D.), chairman of the Senate Budget Committee, presented his version of Mr. Obama's budget to his colleagues on Tuesday, including an increase in annual nondefense spending of 7% for 2010 -- a $15 billion reduction from the president's.

Rep. John Spratt (D., S.C.), the House Budget Committee chairman, was expected to make somewhat smaller reductions when he rolled out his plan on Wednesday.

Lawmakers also are trimming back several of the president's longer-term spending and tax plans. Mr. Conrad, for example, squeezes spending growth in part by dropping tens of billions of dollars set aside in the president's budget for more rescue funds for the financial-services industry. Lawmakers said they could add the money back if it is needed.

Lawmakers also were effectively excluding several middle-class tax-cut pledges that Mr. Obama made in his budget, including long-term relief from the Alternative Minimum Tax, and even long-term extension of his Making Work Pay credit. Extending AMT relief and the Making Work Pay tax credit could run around $200 billion each over the next five years. Both are in effect now but expire soon.

The pressure on the Obama budget reflects the difficult fiscal hand that officials have been dealt, Mr. Conrad said. Despite the changes, Senate Democrats sought to depict the Conrad plan as workable.

"I think the president still can achieve health-care reform, can get a significant bill on energy and the environment, and has all his spending for education," said Sen. Ben Cardin (D., Md.).

But Sen. Tom Harkin (D., Iowa) predicted, "We're all going to feel a little pain in this."

The annual budget debate is important because it influences many major decisions that Congress will make in coming months, including spending bills. The budget resolution also can lay out powerful fast-track procedures for major policy changes, making them far easier to pass. This year, for example, many progressive Democrats are looking to the budget resolution to put health-care and climate-change legislation on a fast track.

But many moderate and conservative Democrats fear the consequences of the White House's additional spending, on top of the big stimulus bill and fiscal 2009 appropriations, plus massive federal bailouts for financial institutions. Those Democrats -- organized in the House as the "Blue Dog Coalition" -- have been pushing congressional leaders to reduce or offset the costs of any new initiatives.

Some moderate Democrats, along with Republicans, also are pushing for slowing down some of Mr. Obama's big policy changes, climate change in particular, but also health care. As of late Tuesday it appeared that climate-change legislation wouldn't be on a fast track in either the House or Senate resolution, and health care would only be in the House version, setting up a tough negotiation with the Senate.

Progressive activists who favor Mr. Obama's budget plans are pushing back against the moderates. On Tuesday, two groups, the Campaign for America's Future and USAction, announced a publicity campaign to get Blue Dog members to support Mr. Obama's budget initiatives.

Progressives say now isn't the time for fiscal restraint, given the economy's fragile state and the need for long-term overhauls in health care and energy.

Mr. Obama will be on Capitol Hill on Wednesday to rally support for his budget, following Tuesday's prime-time White House news conference.

http://online.wsj.com/article/SB123792991709930321.html

[Peikko 1,575]

A rumble in the jungle? Great

[I AM NOT THAT GUY 5,715]

A rumble in the jungle? Great

Yeah, I miss the days in the old Democratic majority, when the Blue Dogs held the center, and the leadership could not whip enough votes without them. When the Republicans won the House in the '94 midterm election, many of the Blue Dogs, (then called Yellow Dogs) switched parties.

[Ban Hammer 13,716]

hold onto your wallets when the white house looks for new revenue.