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Issues concerning legislative negotiations for the 2003 federal budget are examined, focusing on how the $2.16 tril budget resolution put forth by House Republicans compares to Pres George W. Bush's $2.13 budget proposal and Democratic proposals. Topics include $4.4 bil in 2003 tax cuts and $46 bil 2003 deficit the House Republican plan, emphasis on homeland security and defense, and Democratic concerns to protect social security and Medicare.

Issues concerning a nonbinding budget resolution passed by the House and Senate during the week of May 14, 2001, are examined, focusing on how it provides the context for an 11-year, $1.35 tril tax cut. Topics include Republican initial attempts for a $1.6 tril tax cut, budget allocation for Medicare reform, and Democratic arguments that the budget is fiscally irresponsible.

Issues related to tax reform and budget negotiations in the 106th Congress are examined, focusing on the lame-duck aspects of the December 2000 and January 2001 negotiations. Topics include the pending 10-year $240 bil tax relief package, Senate Republican leadership posts, and bankruptcy reform.

Senate Finance Committee Chairman William V. Roth's $75 bil tax extension bill provided the context for battles over the fiscal 2000 budget and personal tax credits that may be eroded by a rising alternative minimum tax. Members in both parties believe Roth's bill is too expensive but Congress needs to come to an agreement if it is to save provisions in the bill that will prevent elimination of the tax credits.

The Senate on Jul 30, 1999, approved a Republican tax cut bill by a vote of 57 to 43. The bill included marriage penalty tax relief, an increase in the standard deduction, reduction of capital gains tax, and an increased deduction for IRA contributions. It proposed over $800 bil in tax cut relief over ten years and, as written, will have an expiration date of Sep 30, 1999. A House and Senate conference will work out differences between the two legislative bodies by Aug 3, 1999. Pres Bill Clinton has vowed to veto the bill as too costly.

Moderates and conservatives in the Senate will begin on July 28, 1999, markups of Senate Finance Committee Chair William V. Roth's $792 bil tax cut bill. Analysts believe conservatives aim to prepare a bill that will stand as a political statement but will face certain veto by Pres Bill Clinton, and moderates are working to negotiate a practical deal. Disputed topics include the size of the tax cut, reduction of tax rates, reform of alternative minimum tax, and the marriage penalty tax.

House of Representatives Speaker J. Dennis Hastert negotiated an agreement between Republican moderates and conservatives in order to pass the Financial Freedom Act of 1999, a $792 bil tax cut. Moderates feared the tax cut was too large and threatened deficit reduction. Discussions concerned when tax rate reductions would be phased in, how to reduce a marriage penalty tax, and the size of capital gains tax reduction.

Congressional taxwriters stated during the week of May 10, 1999, they intend to extend many tax provisions that expire June 30, 1999. Extensions will be made for such provisions as research tax credits, welfare-to-work credits, and the work opportunity credit. Extension would be effective July 1, 1999. The statement was made in a legislative environment where the tax agenda is complicated by financial needs for NATO's involvement in Yugoslavia.

Pres Clinton's fiscal 2000 budget contains numerous tax credits that further complicate the tax code and provisions to penalize those who use inappropriate tax shelters. Clinton's tax credits, which offer a myriad of benefits for a myriad of acts, may have been better enacted as administrative provisions. His budget contains a proposal which redefines tax avoidance in a way that allows the government to recoup revenue from those who claim tax benefits from artifical losses.

Pres Bill Clinton's 1999 budget request contains 36 proposals that increase taxpayer rights. Eighteen of the proposals do not appear in House bill H.R. 2676, known as the "Taxpayers Bill of Rights." Clinton's new proposals include new legal remedies for taxpayers, changes in tax collection procedures, and new rights for taxpayers to quash summons of financial records from third parties.

The 1997 tax legislation, signed by Pres Clinton in early Aug 1997, is discussed in detail. Tax increases totalling $56 billion offset net tax cuts of $96 billion. The capital gains tax rate cut, educational tax breaks, child credit, IRA expansion, and estate tax cuts make up most of the relief package, while much of the offset comes from the air travel excise tax extension. Areas discussed include corporate and individual taxes, international taxes, compensation taxation, excise taxes, tax administration issues, and industry-specific taxes. Investment and tax planning strategies are also discussed.

The Joint Committee on Taxation identified 79 items in the 1997 Taxpayer Relief Act as potential targets for Pres Clinton's line-item veto power. The White House indicated most of these provisions were legitimate, but the president might veto a few of them. The US Supreme Court had not ruled definitively on the constitutionality of the veto, so any veto was likely to result in some opposition. A list of the 79 provisions is included.

The House and Senate passed long-awaited tax legislation in mid-summer 1997 which Pres Clinton was expected to sign. Liberal Democrats, such as Richard Gephardt and Paul Wellstone, characterized the legislation as unfairly favorable to the wealthy. The bill includes expanded IRAs, estate and capital gains tax cuts, educational tax incentives, a welfare-to-work tax credit, small business relief, and the most expensive provision in the plan, the child credit. The biggest revenue-raiser was the airline excise tax. The Joint Committee on Taxation targeted 80 provisions potentially subject to Clinton's line-item veto power.

The robust American economy was the real reason negotiators reached a budget agreement. Revised Congressional Budget Office deficit estimates made compromise easier, but technical errors were found in the budget resolutions, which led to suspicion regarding the viability of projected post-2001 surpluses. Ways and Means Chair Bill Archer's changes to the plan were considered likely to be complicated by conflicting political pressures and goals.

Pres Clinton's 1998 budget plan contains targeted tax cuts that dismay his GOP critics. Clinton's plan to cut taxes by $98 billion over five years is anchored by his proposals for educational tax incentives, expanded IRAs, and a child credit. While administration officials such as Lawrence Summers defend these family-oriented tax breaks, others say the President's plans, such as the HOPE scholarship, will add tax complexity and increase the IRS bureaucracy. Accordingly, much of the budget negotiating process will center on these targeted cuts.

An item-by-item analysis of each of Pres Clinton's 1998 tax proposals is presented and discussed. The proposals cover a wide range of topics including a child credit, educational tax credits and incentives, expanded IRAs, empowerment zone expansion, brownfields cleanup, a capital gains tax exclusion on home sales, a nonconventional fuel credit expiration date rollback, the so-called welfare-to-work and work opportunity credits, credits and rules affecting multinationals and overseas subsidiaries, taxation of securities and financial instruments, Superfund taxes, and a host of other tax credits and similar measures.

GOP Senate leaders, led by Trent Lott, will push for a 1998 budget tax cuts totalling $124-150 billion, which may include estate and capital gains tax reductions. Tax reform measures are also likely to be considered. The House voted in Jan 1997 to adopt parliamentary rules revisions affecting points of order on tax bills and allowing tax legislation estimation of macroeconomic effects.

Office of Management and Budget Director Franklin Raines said Pres Clinton would focus on his 1996 campaign tax proposals in formulating his 1998 budget plan. GOP leaders will wait for Clinton to make the first move on tax issues, however. Tables listing Clinton's proposed tax revenue raisers and losers for 1997, including those proposals made at the Democratic National Convention, are presented.

The tax expenditures analysis in the proposed fiscal 1997 budget shows the revenue losses incurred through exclusions, exemptions, credits, deductions, and similar tax preference items. Revenue loss, outlay equivalent, and present value accounting methods are used to estimate the expenditures through 2001. The budget considers performance measurements, the expenditures' economic effects, and explains the baseline concept utilized in calculating the expenditures.

Pres Clinton's 1997 budget, essentially similar to his 1996 plan, would provide $123 billion in tax relief to middle-income taxpayers and small businesses. Republicans criticized the plan's tax relief and tax increase provisions. Several Democrats also criticized the tax cuts. The plan would allow expansion of IRAs and provides tuition and child tax credits. Other provisions include incentives for cleaning up economically distressed areas, combat pay exclusion for the US troops in Bosnia, elimination of corporate tax benefits, and earned income tax credit modifications.

The Committee for Economic Development feels that the tax reform and balanced budget proposals originating in Congress are unfeasible if tax cuts are included. Decreasing revenue while trying to balance the budget is a recipe for disaster. Furthermore, not including Social Security cuts in budget proposals severely limits the nation's ability to balance its budget. Details are discussed. Increasing national savings should be a top priority, but tax cuts alone will not do the job.

The House-Senate reconciliation conference produced a budget bill after days of bargaining and concessions that is expected to be narrowly passed. The largest part of the tax package is the 36% top rate on people earning over $150,000 and a 10% surtax on taxable income over $250,000. The president's original plans for taxing social security benefits were reduced to appease some Democrats who had not committed to the package. The only energy tax agreed upon was the 4.3 cent-per-gallon gas tax. Payroll taxes, deductions, investment incentives and business-related taxes are also discussed.

Bill Clinton's budget is taking precedence over his economic stimulus program as Congress sets a timetable for action. Clinton has asked congressional leaders for a fast track on the budget process and they have agreed. The budget includes over $46 billion in revenue raisers for FY 1994 and over $12 billion in tax expenditures for FY 1994. Public support of the budget has come from the US Chamber of Commerce Federation while criticism has come from Andre P. Fogarasi, Clint Stretch and D.J. Gribbin.