Slashing $100 billion: What's first to go?

John Boehner, who will become the new Speaker of the House of Representatives, has announced that his number one priority in 2011 is to reduce spending. He's hoping to reduce spending by $100 billion from the $3 trillion federal budget.

CNN reports:

But GOP leaders say they will focus only on non-security discretionary spending, and won't slash funding for defense, Social Security or Medicare.

That makes their task a lot harder.

Cutting non-security discretionary funds by $100 billion means a 21% annual reduction in the part of the budget that includes funding for education, health and human services and housing and urban development, among other things, according to the Center on Budget and Policy Priorities, a liberal think tank.

In other words, the sacred cows of domestic Democratic policy.

Asked which programs will be cut to get to the $100 billion target, Boehner did not offer specifics.

"But I will tell you," he told reporters earlier this month. "We are going to cut spending."

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Congress Settles for $300B Increase in Debt Ceiling Until Next Year

From the Examiner.com:

House Democrats settle for a $300 Billion increase in the national debt ceiling in order to avoid limits on spending.

Moderate Democrats had intended to attach amendments to the initial $1.8 Trillion increase that would have required congress to pay for any new legislation by either cutting spending in other areas, or raising taxes. In order to avoid what seemed like a responsible reaction to out of control spending Democratic leaders changed the debt hike to $300B for the next two months, and intend to debate for the rest of the increase next year when congress returns to session.

In an uncharacteristic move Democratic leaders have also said they would not attach the debt hike to the defense spending bill, as it was initially thought. It is doubtful that this is a trend, but for a change congress seems to be letting a bill stand or die on its own merits.

Time Running Out for Bipartisan Health Compromise

With diminishing public support, time is running out for Obama to get his health care reform bill through Congress. Now that the holiday weekend is over, lawmakers are back to work and are trying to come up with a compromise in order to get the bill passed. Check out the following article explaining the latest activity on Capitol Hill courtesy of the Associated Press.

In a fresh sign of divisions in the president's own party, a key House Democratic moderate said he can no longer support legislation that includes a new public insurance plan to compete with private industry.

And in the Senate, any hope of bipartisan agreement hung in the balance as a small group of negotiators on the pivotal Finance Committee prepared to meet in a last-ditch effort to reach consensus on a compromise bill.

Rep. Mike Ross, D-Ark., took the lead in July in negotiating changes to House Democrats' health overhaul bill to make it more palatable to moderates. He voted for it in committee with a public plan — something most House liberals say they can't do without.

But Ross said Tuesday that after hearing from constituents during the August recess he could not support a bill with a public plan.

"If House leadership presents a final bill that contains a government-run public option, I will oppose it," Ross said.

Democrats Agree on Tax Hike to Fund Health Care

From the Washington Post.com:

House Democrats agreed yesterday to raise taxes on the wealthy to pay for a sweeping expansion of the nation's health-care system, proposing a surtax on the highest earners that could send the top federal tax rate toward 45 percent.

Beginning in 2011, the plan would target all income over $350,000 a year for families and $280,000 a year for individuals, Democratic sources said. The surtax would start at 1 percent, rise to around 1.5 percent for families earning more than $500,000, then step up again, to around 3 percent, for families earning more than $1 million, Democrats said.

That would raise about $550 billion over the next decade, Democrats said -- about half the cost of reforms that are expected to cost about $1 trillion. The surtax percentages could rise two years later, they added, if lawmakers think additional cash is needed to cover the cost of health-care reform.

The top federal tax rate currently stands at 35 percent, but Democrats have vowed to raise it to 39.6 percent next year, when cuts enacted during the Bush administration expire. Combined with other federal tax adjustments, the surtax could leave most taxpayers with annual incomes more than $350,000 facing top federal rates of at least 45 percent, said Robert Carroll, a senior fellow at the nonprofit Tax Foundation.

House Democrats Give Shape to Tax-Cut Plans

From the Washington Post:

House Democrats yesterday offered a more detailed analysis of a $275 billion tax-cut plan that gives two-thirds of its benefits to individual taxpayers, part of the $825 billion stimulus package they hope to send to President-elect Barack Obama before President's Day.

After tinkering with Obama's proposals, Democrats on the Ways and Means Committee released a plan that focused relief on individuals, reducing the amount of tax cuts intended for businesses that the incoming administration initially requested. The cuts would be phased out after two years.

The Senate Finance Committee is expected to release its own tax plan, which will be similar in scope but likely to include differing details, soon. The tax cuts could grow to nearly $350 billion if congressional leaders eventually add a provision that keeps upper-middle-class workers from creeping into a tax bracket that was originally designed to ensure the wealthiest families did not shelter too much of their income from the Internal Revenue Service.

The House Democrats' package includes $145 billion worth of income tax cuts for most Americans, $500 per year for individuals and $1,000 per year for families, which would mostly occur by reduced withholdings from paychecks. Another $32 billion in relief comes from increasing the eligibility for child tax credits and a new credit for college tuition. Under the House Ways and Means Committee plan, small businesses would be allowed to write off up to $125,000 in capital expenditures, costing the Treasury an estimated $41 billion -- the largest benefit given to businesses.

The tax package also includes an unusual credit to businesses that hire unemployed veterans or "disconnected youth," a credit for the first 40 percent of $6,000 in their wages. As defined by House Democrats, disconnected youth are those who are 16 to 25 years old, out of school at least six months and not working.