US Congress Approves 2010 Budget

by Mike Godfrey, Tax-News.com, Washington

01 May 2009

The United States Congress has approved President Obama’s fiscal year 2010 budget blueprint, which lays out the framework for tax and spending legislation over the coming five years.

According to Senator Kent Conrad, Chairman of the Senate Budget Committee, the budget, which is non-binding, provides USD764bn in tax cuts, focused on the middle-class. It extends the 10% bottom income tax bracket, the child tax credit, marriage penalty relief, and education incentives, as well as all of the other 2001 and 2003 tax legislated under the George W. Bush administration, but only for those families making under USD250,000. The budget also finds room for three years' worth of alternative minimum tax relief, although it does not offer a permanent solution to this unpopular tax.

The Senate adopted the budget blueprint by a 53-43 vote, shortly after the House of Representatives had approved the plan by a vote of 233-193. Not a single Republican in either chamber voted in support of the budget, laying waste to Obama’s ideal of building a bi-partisan consensus for his economic recovery strategy. Seventeen House Democrats also rejected the plan, as did four Senate Democrats. However, the Democrat majority succeeded in preventing Republicans from erecting a procedural hurdle known as a filibuster to block Obama’s controversial spending plans in the area of healthcare.

Conrad said that the budget puts the country back on a “more fiscally responsible path” by cutting the deficit in half by 2012 and by two-thirds by 2014 – naturally a claim that was disputed by GOP leaders.

“Despite the majority’s insistence that this bloated budget is the answer to all of our problems, several facts are irrefutable: working Americans will be hit hard with higher taxes and more debt,” remarked Senator Judd Gregg, the ranking Republican on the Senate Budget Committee.

“This budget will allow a national sales tax on energy which will cost American households up to USD3,000 a year. It would add to the burden on the middle class by ending the Make Work Pay tax credit and omitting USD187bn worth of tax relief that was promised in the House-passed budget resolution. That will cost working Americans more money at a time they can least afford it,” he added.

Judd said that Americans will not only have to saddle a higher tax burden, but also suffer “massive new levels of debt as far as the eye can see.”

“The spending is so reckless that even with much higher taxes, we are on an extremely dangerous fiscal path. This budget will double and eventually triple the public debt, driving it up to 75% of GDP. How does a nation get out from underneath that?” Gregg asked.

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