Tax Cuts/Credits:
In a flurry of action driven by media attention, Republicans in both chambers passed bills expanding the child tax credit, but the fallout may reveal a new weakness in the GOP’s armor.
1) New York Times reporter David Firestone almost single-handedly created an issue out of the fact that the child tax credit was not refundable, meaning it could be greater than a taxpayer’s tax burden. Democrats and much of the media told the story that Republicans left some families out of the tax credit, and that this was an "error" that had to be "fixed."
2) Sen. Chuck Grassley (R.-Iowa), chairman of the Finance Committee, immediately got on board with the Democrats’ "fix." The White House signed on immediately, too, but House leaders were not so quick to go along.
3) Both Majority Leader Tom DeLay (R.-Tex.) and Ways and Means Chairman Bill Thomas (R.-Calif.) considered the issue a bogus one. Political necessity pressured them to pass something, and so they passed a broad bill that made permanent much of the Bush tax cuts, and made the "fix," expanding the child tax credit to become a welfare payment.
4) Democrats charge that Republicans are "holding hostage" the tax-credit extension, but House and Senate passage did partially defuse the Democratic attack. In the end, the attack itself and the media firestorm have made their impact, and it is small but negative on the GOP and perception of the Bush tax cuts. Signing either of these bills into law will do little for the Republicans politically. With DeLay and Thomas on the conference committee, Republicans can easily sink the bill if they wish.
5) Democrats running for President are working hard to turn "Bush tax cuts" into a slur. Congressional Democratic attacks on this issue have been a boost to that effort.
Appropriations:
Republicans start off on a fiscally liberal foot in the Fiscal Year 2004 appropriations process, possibly harming their credibility on fiscal conservatism.
1) Republican leaders of both chambers have agreed with the White House for $5.2 billion more in non-defense discretionary spending on top of the Budget Resolution. This is not "new" spending, strictly speaking: Some of it comes from defense and the rest from accounting shifts.
2) Conservative back-benchers are not happy with the precedent. Spending usually balloons beyond the budget caps in September and October, and lifting the ceiling now may just be an earlier opening of the spending floodgates.
3) The conservative Republican Study Committee, powerless to block the deal, is trying to get promises that the new spending caps will be maintained. Still, few folks on the Hill consider it likely that this year will be much different from other years, when the GOP let spending run out of control.
4) Passing the Labor/Health and Human Services/Education bill early, as the House leadership hopes to do, could do some good towards keeping down this year’s price tag. Items in that bill are the hardest to keep within their allocations. Passing it early means that any expansions would apply pressure to other spending bills-not just the overall cap, which Congress has little trouble breaking come fall.
Reorganization:
The Pentagon hopes to scale back the 70,000-troop deployment that has been in Germany since World War II, shifting those forces to other parts of the globe.
1) Cries arose advocating a downsizing of the Germany deployment in the wake of German Chancellor Gerhard Schroeder’s attacks on the United States during his reelection last fall and Germany’s opposition to the invasion of Iraq.
2) The Defense Department asserts that Germany’s lack of cooperation was not the cause of the reorganization, but instead attributed the plan to shifting geopolitical concerns. U.S. Defense Secretary Donald Rumsfeld was in Germany last Wednesday, and both nations sounded conciliatory notes.
3) Officials in Washington had seen a heavy presence in Germany as key to preserving the U.S. as the leading power in NATO.
4) The new layout would replace the large bases such as those in Germany and Turkey (whose Parliament was also less than fully cooperative with President Bush’s war efforts) with small, flexible posts of troops, which can be more quickly rearranged. The "forward operating bases," rather than holding large permanent forces, would be fully utilized only when needed.
5) The Defense Department plans to shift troops to Africa and Eastern Europe, where the U.S. is courting the favor of the prospective new entries into the European Union-what Rumsfeld calls "New Europe."
6) The downsizing in Germany will likely have a negative impact on the German economy, a development that does not bother the Bush Administration too much.
