OBAMA forms task force to get more of YOUR $$$$

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WASHINGTON -- The White House said it would launch a search for new tax revenues, as Congressional leaders moved to scale back proposed spending increases and tax cuts in President Barack Obama's ambitious budget.

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Budget Breakdown

The budget blueprint estimates a federal deficit of $1.75 trillion for 2009.

The Obama administration plans to create a task force to consider elimination of corporate loopholes and subsidies, tougher enforcement against tax avoidance, and tax simplification, White House Budget Director Peter Orszag said late Tuesday.

Mr. Obama's budget proposal began the process of addressing problems such as the tax gap, the difference between taxes owed and taxes collected. "The question is whether we can be even more aggressive" in those areas, Mr. Orszag said in an interview late Tuesday. The task force will be run through a White House advisory board being headed by former Federal Reserve Chairman Paul Volcker, Mr. Orszag said.

No target for a dollar figure has been set. But the effort theoretically could lead to tens of billions of dollars in additional collections. The tax gap alone is estimated at $300 billion a year, of which more than $100 billion is believed to be collectible, according to IRS statistics.

By congressional estimates, annual spending on basic government services -- programs other than defense and entitlements -- would rise by more than 10% in fiscal 2010 under the $3.6 trillion Obama plan. Sen. Kent Conrad (D., N.D.), chairman of the Senate Budget Committee, presented his version of Mr. Obama's budget to his colleagues on Tuesday, including an increase in annual nondefense spending of 7% for 2010 -- a $15 billion reduction from the president's.

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Budget Stepping Stones

See the steps by which the federal budget will be finalized.

Rep. John Spratt (D., S.C.), the House Budget Committee chairman, was expected to make somewhat smaller reductions when he rolled out his plan on Wednesday.

Lawmakers also are trimming back several of the president's longer-term spending and tax plans. Mr. Conrad, for example, squeezes spending growth in part by dropping tens of billions of dollars set aside in the president's budget for more rescue funds for the financial-services industry. Lawmakers said they could add the money back if it is needed.

Lawmakers also were effectively excluding several middle-class tax-cut pledges that Mr. Obama made in his budget, including long-term relief from the Alternative Minimum Tax, and even long-term extension of his Making Work Pay credit. Extending AMT relief and the Making Work Pay tax credit could run around $200 billion each over the next five years. Both are in effect now but expire soon.

The pressure on the Obama budget reflects the difficult fiscal hand that officials have been dealt, Mr. Conrad said. Despite the changes, Senate Democrats sought to depict the Conrad plan as workable.
[White House to Hunt for New Tax Revenues] Getty Images

Lawmakers seek to ensure that President Barack Obama trims the deficit.
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"I think the president still can achieve health-care reform, can get a significant bill on energy and the environment, and has all his spending for education," said Sen. Ben Cardin (D., Md.).

But Sen. Tom Harkin (D., Iowa) predicted, "We're all going to feel a little pain in this."

The annual budget debate is important because it influences many major decisions that Congress will make in coming months, including spending bills. The budget resolution also can lay out powerful fast-track procedures for major policy changes, making them far easier to pass. This year, for example, many progressive Democrats are looking to the budget resolution to put health-care and climate-change legislation on a fast track.

But many moderate and conservative Democrats fear the consequences of the White House's additional spending, on top of the big stimulus bill and fiscal 2009 appropriations, plus massive federal bailouts for financial institutions. Those Democrats -- organized in the House as the "Blue Dog Coalition" -- have been pushing congressional leaders to reduce or offset the costs of any new initiatives.

[E_]

I don't know, a lot of what he said last night makes sense.