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US Senate Approves 2008 Budget Resolution

by Mike Godfrey, Tax-News.com, Washington

27 March 2007


The US Senate has approved a budget proposal that strengthens funding for the Children’s Health Insurance Program, extends tax relief for America’s working families, and balances the budget by 2012, according to Senate Finance Committee Max Baucus.

On Wednesday, the Senate approved a Baucus proposal to put $15 billion toward renewal and expansion of the expiring CHIP program, including $5 billion in surplus funds in 2012, and to use surplus funds to extend tax cuts, including the child tax credit and relief from the joint-filing penalty paid by America’s married couples. Baucus said the addition of his amendment leaves the Senate budget balanced in 2012. Another Baucus amendment, requiring action on CHIP before September 30, 2007, was also approved by the Senate.

“We amended this budget in a way that heightens our fiscal focus on American families and kids. The promise of $50 billion for children’s health insurance is now closer to reality. The tax relief American families need, and frankly expect, is on its way,” stated Baucus, adding: “Using surplus funds to keep kids healthy and to improve working families’ finances is the right way to go. The Senate is taking a strong, family-focused budget into conference with the House.”

Cosponsors Senators Evan Bayh (D-Ind.), Mary Landrieu (D-La.), Bill Nelson (D-Fla.), and Mark Pryor (D-Ark.) joined Baucus in putting forward the measure. In addition to providing the $15 billion in funds for the Children’s Health Insurance Program over the last three years of the budget window, the amendment effects a $15 billion decrease in the “reserve fund” that requires additional money to be raised to cover CHIP costs.

Tax measures in the amendment include: permanent marriage penalty tax relief; permanent extension of the refundable child tax credit; permanent extension of the adoption tax credit; permanent extension of the higher child care tax credit; permanent allowance of earned income tax credit for American soldiers’ combat pay; permanent extension of the 10% income tax bracket; and permanent extension of current estate tax rate and exemption level.

Remaining surplus funds are also designated for tax relief, said Baucus.

The Senate must now work with the House of Representatives to craft a final budget for Congressional approval.

Commenting on the Senate budget proposal, which was approved following a 52 to 47 vote, Ken Conrad (D - ND), Senate Budget Committee Chairman, said that as well as providing for middle class tax relief, the measures will bring about substantial estate tax reform, while reducing the increase in government debt as a share of the US economy.

"This is a budget that will balance by 2012. That is a significant turning point for the country after years of running up massive deficits, and adding dramatically to the debt," he stated. "This budget will not only balance in 2012, but will stop the growth of the debt as a share of gross domestic product. Spending as a share of gross domestic product will go down."

However, according to Judd Gregg (R - NH), Budget Committee ranking member, the Senate budget increases taxes by more than $700 billion, contains billions in new spending, and drives the debt up by at least $2.4 trillion. "But most regrettably, this budget squanders the opportunity to address the fiscal tsunami we will face as the Baby Boom generation retires," he remarked.

“Reasonable amendments that would help keep entitlement programs like Medicare solvent and lessen the crushing burden on future generations have been rejected. So what we are left with is a classic tax-and-spend budget that grows the government and yet does nothing to help our children pay for it," Gregg argued.

“With $67 trillion in unfunded obligations, this issue is too big to ignore. I will continue to work to address the serious problems posed by entitlement spending, and hope to join forces with colleagues in a bipartisan manner to find solutions," he concluded.


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