RANGEL REACTS TO TREASURY DEPARTMENT ANNOUNCEMENT THAT IT WILL HAVE TO BORROW MONEY TO PAY FOR "REFUND" CHECKS

WASHINGTON - 07.30.01 | Noting the Treasury Department's announcement today that it will need to borrow a net $51 billion in this fiscal quarter in part to pay for "tax rebates" included in the recently enacted tax bill, Rep. Charles B. Rangel (D-NY) warned today that the bill poses short and long term threats to reserves committed to providing promised Medicare benefits.

"The government is bleeding red ink again. Thanks to the fiscal discipline of the Clinton Administration, we had thought that the era of big deficits was over. Well, thanks to the gimmicks the Republicans played in the big tax bill, deficits are already back. It will be difficult for Democrats to resist saying 'I told you so'," said Rep. Rangel.

In April, the Treasury Department had said it expected to pay down about $57 billion in debt held by the public in the July-September quarter, according to published news reports. However, the large tax cut pushed through by President Bush included shifts in corporate tax-due dates and $38 billion in "refund checks" that Republicans added to the tax bill in the last days before passage to make the larger bill seem more palatable to a skeptical public.

"The whole Republican rationale for passing such a big tax cut is that we needed to send the surpluses back to the people. How ironic is it that we are now borrowing from the people in order to pay them their checks?" said Rep. Rangel. "Unfortunately, this is just the beginning. The Republicans are already writing confidential memos that acknowledge that the economic slowdown, Republican budget plans, and the Bush tax cut will force a raid of the Medicare and Social Security surpluses."

Rep. Rangel was referring to a memo obtained by the BNA news organization and reported on in July 27th's Daily Report for Executives. According to that report, the internal Republican memo said: "We are possibly already into [the] Medicare [Part A] trust fund this year and every year through FY05" ... "We also are very close to touching the Social Security surplus in FY03."

According to published reports, corporate tax revenues received by the Treasury have fallen behind those from last year. Rep. Rangel pointed out that whatever errors there are in short-term projections are likely to extend into later years.

"This information already calls into question the rosy economic forecasts which President Bush used to justify a bloated and back-loaded tax bill. If we can not even pay for the first year of the bill without endangering the Medicare trust fund, we'll be in big trouble when the revenue losses increase dramatically in future years."

-- Cherri (jessam6@home.com), August 05, 2001

Answers

Cherri,

So what? The "surpluses" were of dubious quality from the start. The Medicare and Social inSecurity "trust funds" are "invested" (ha ha) in Treasury bonds. The only way for the federal government to get its house in order is through spending cuts, not tax increases.

What really irks me is that "refund" and "tax rebates" are in quotes in the article. As if it really wasn't the taxpayers' money; it was the government's money. Typical Democrat thinking.

-- J (Y2J@home.comm), August 05, 2001.

Perhaps those terms were put in quotes so as not to imply that the payments were coming out of a cash reserve.

-- David L (bumpkin@dnet.net), August 05, 2001.