Wall Street Journal - September 14, 1999
GOP BUDGETEERS TRY TO DELAY TAX-CREDIT PAYMENTS TO POOR
By DAVID ROGERS Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- House Republicans are considering a plan to delay billions of dollars in tax-credit payments to poor families to help offset spending elsewhere for education and social services next year.
Earned-income tax credits, which cost about $30 billion annually, are typically distributed in lump-sum payments between January and May as individuals file tax returns. The proposal would make the payments on a monthly or quarterly basis over 12 months and push a portion of the costs past Oct. 1 next year and into fiscal 2001.
While no decision has been made, the plan is taken seriously by Speaker Dennis Hastert's office, and Joint Taxation Committee estimates show a short-term savings of $7 billion. "Not a single person will lose a penny on this," said one leadership aide. "The savings would go to pay for spending for the same targeted population."
Nonetheless, most EITC payments go to households with children, and incomes under $20,000. That the proposal has moved this far underscores the level of frustration in the GOP as it tries to minimize its failure to live within prescribed spending limits.
With the new fiscal year beginning in two weeks, Congress is on track not only to break these caps, but also to again borrow from Social Security funds to finance government operations. Anxious to save face, the leadership is falling back on accounting gimmicks to disguise the problem by shifting tens of billions of dollars out of fiscal 2000.
The EITC proposal fits into this strategy and is one example of delayed spending. The opposite is the case concerning agriculture, on which the GOP wants to spend as much as possible in the next two weeks before the current fiscal year expires Sept. 30.
The Senate already has approved about $7.4 billion in emergency aid to farmers hurt by a second year of low commodity prices. Normally, this money wouldn't be distributed before Oct. 1, even if endorsed by the House in negotiations this week. But one option under discussion is the formation of a special entity to receive the funds, which would justify their being counted as an expenditure on the budget books this fiscal year.
The proposals now risk distorting the appropriations process to a degree never seen before. President Clinton opened the door by requesting billions in advanced funding for his budget priorities past 2000. Senate Republicans now are seizing the chance to use the same approach to shift as much as $20 billion in costs into 2001 and extricate themselves from the current spending crunch.
Meanwhile, on a 55-40 Senate roll-call vote, Western and Gulf Coast oil interests fell five votes short of the 60 needed to limit debate on their provision to block Interior Department rules governing royalties paid on petroleum taken from federal lands. Industry backers say the changes are unduly costly, but Democratic Sen. Barbara Boxer of California has vowed to delay action on the entire Interior budget unless the provision is dropped.