Cato Daily Dispatch for December 6, 2005
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Congress Tackles Spending, Taxes and the BudgetMontreal Climate Change Meeting
D.C. Ballpark Figure Now at $700 Million
Congress Tackles Spending, Taxes and the Budget
"The House reconvenes on Tuesday for a critical year-end legislative push, with lawmakers trying to wrap up a series of contentious budget, tax and spending measures against a backdrop of ethics inquiries and differences over Iraq policy," reports the New York Times.
"Returning from a Thanksgiving recess that followed an acrimonious debate over withdrawing from Iraq, House members will try to resolve differences with the Senate over a five-year budget reduction plan, enact a package of tax cuts, wrap up two spending bills and consider immigration legislation. But to reach that goal, the Republican leadership will have to overcome the reservations of moderate Republicans and united resistance from Democrats, who indicated on Monday that they remained opposed to the spending cuts and much of the Republican tax agenda."
In "This Is Tax Reform?," Alan Reynolds, a Cato senior fellow, writes: "[In October,] President Bush spoke to the Economics Club of Washington, D.C., repeating his plea to make the 2001-2003 tax laws permanent. Yet he created The President's Advisory Panel on Federal Tax Reform, which implies something about the tax laws needs to be changed. We can't ask for permanence and big changes at the same time. The commission must have taken the president's appeal to leave things alone too literally, since it has taken special care to avoid lowering tax rates."
Chris Edwards, Cato's director of tax policy studies, in his new book provides policymakers with solutions to the growing federal budget mess. Downsizing the Federal Government identifies more than 100 federal programs that should be terminated, transferred to the states, or privatized in order to balance the budget and save hundreds of billions of dollars. Edwards proposes a balanced reform package of cuts to entitlements, domestic programs, and excess defense spending. He argues that these cuts would not only eliminate the deficit, but also strengthen the economy, enlarge personal freedom, and leave a positive fiscal legacy for the next generation.
Montreal Climate Change Meeting
"While the White House remains implacably opposed to the Kyoto protocol, mayors across the US are signing up to the climate-change agenda in the most practical way possible -- committing to cut the greenhouse gas emissions generated by their own towns and cities," writes Fiona Harvey in the Financial Times.
"Underlining their growing clout, they have organised a gathering on the fringes of the Montreal meeting where they will be joined by counterparts from other countries in what is becoming an increasingly potent grassroots movement. To date, nearly 200 mayors from the U.S., representing more than 40 million citizens, have joined in the 'mayors climate protection agreement': a pledge to meet or exceed the reductions that would be required under Kyoto."
Patrick Michaels, a Cato senior fellow, comments that "the Kyoto Protocol on global warming is a futile treaty that will do absolutely nothing measurable about climate change. It will, however cost the United States a fortune, by requiring us to reduce our emissions of carbon dioxide, a byproduct of our economy, by 25 percent. The only way this can be accomplished is through a series of extremely regressive taxes on energy. Remember that gasoline at $3 per gallon only reduced usage by 4 percent."
In "Blair Plays Fair," Michaels notes that "It's well known in scientific circles that Kyoto would only change global temperature by seven-hundredths of a degree Celsius in fifty years. But it would require reductions in carbon dioxide emissions to 7 percent below 1990 levels by the period 2008-2012. The only way this is possible is with a massive series of highly regressive energy taxes."
D.C. Ballpark Figure Now at $700 Million
"Top [Washington, D.C.] officials discussed new estimates for a baseball stadium project in Southeast Washington yesterday and determined that costs could reach more than $700 million, which is more than $100 million beyond the previous forecast of the city's chief financial officer," according to the Washington Post. "Officials stressed that the new estimates are preliminary and take into account all potential costs, including $41 million for underground parking, $20 million to upgrade the Navy Yard Metro station and $12 million to rebuild nearby roads. They added that some of the work might not have to be paid for by the city or done at all."
In the Cato Policy Analysis "Caught Stealing: Debunking the Economic Case for D.C. Baseball," professors Dennis Coates and Brad R. Humphreys write that a taxpayer-subsidized ballpark for D.C.'s new baseball team will not improve the District's economy. They examined all 37 U.S. cities that had one or more professional football, basketball, or baseball teams between 1969 and 1996. Their findings suggest that the District can expect at best no economic impact and at worst a negative effect on the local economy.
"Whether it is a surcharge or an increase in the corporate income tax rate," Coates and Humphreys point out, "this so-called fee is a tax increase, pure and simple... Corporations do not pay taxes, people do. Whether it is in the form of lower wages for workers, lower asset values for corporate owners, or higher prices for consumers of the goods and services those companies provide, this tax increase will touch D.C. residents in some way."
Greg Garner, editor, ggarner@cato.org