Friday, November 18, 2005

Cutting Spending, Cutting Taxes

The Republican controlled House has passed a spending bill:

House Republican leaders scored a narrow, hard-fought victory by passing a sweeping bill to reduce federal spending over the next five years early Friday morning without the support of one Democrat.

Remember that not a single Democrat was needed to support the bill. This is what a one-party government implies. Some of the spending cuts come from changes in food stamp rules, reimbursement of Medicaid expenses and student loan programs; all programs which affect the less wealthy among us.

Meanwhile, the Republican controlled Senate extended expiring tax cuts. The energy industry seems to be doing especially well out of this bill:

Senate Republicans beat back Democratic attempts to use the bill to pinch oil and energy companies that have been reporting record profits while consumers pay high gasoline prices, efforts that reflected sensitivity on Capitol Hill to high gasoline prices and fears of skyrocketing home heating costs this winter.

The largest oil companies, nevertheless, would be hit with about $4.3 billion in taxes through a change in accounting methods. That provision drew a veto threat from the White House and upset some Western Republicans, who deemed it an unfair and political attack on the energy industry.

"Is it a windfall tax by another name?" said Sen. Larry Craig, R-Idaho.

The Senate defeated a Democratic effort to impose a temporary windfall profits tax, 50 percent on the sale of oil over $40 a barrel, on profits not reinvested in increasing domestic oil and gas supplies. The money would have been returned to energy consumers through an income tax rebate. A 64-35 procedural vote defeated the effort.

'Who has all the pain?'
"The major integrated oil companies have all of the gain. Who has all the pain?" asked Sen. Byron Dorgan, D-N.D., who then answered his own question: "All the American people who are trying to pay for the price of a tankful of gas or trying to figure out how they are going to heat their home in the winter."

The Senate also defeated an amendment to impose a windfall profits tax on oil companies and use the money to fund a low-income heating assistance program.

The hurricane Katrina is weirdly involved in all this. Paying for the post-Katrina reconstruction presumably necessitates the cuts in the programs for the poor. At the same time, Katrina caused at least some of the price increases of oil and gasoline.