(CNSNews.com) – Legislation to extend myriad tax breaks, unemployment benefits and other spending programs currently before the House would add $115 billion to the nation’s $13 trillion national debt in only two years, according to the Congressional Budget Office.
That bill, the American Jobs and Closing Tax Loopholes Act (H.R. 4213), would ultimately add $84 billion to the debt by 2020, a recent CBO report said. That bit of accounting magic is achieved because House Democrats delayed tax increases until after 2011 and double-counted an increase in the excise tax on oil, according to an analysis provided by the ranking Republican on the House Budget Committee, Rep. Paul Ryan (R-Wis.).
In addition to so-called emergency measures such as extending unemployment benefits and health insurance subsidies, the bill is stuffed full of other, seemingly unrelated provisions that easily push its total price tag to $143 billion.
Among those provisions is the infamous “Doc Fix” or adjustment in the sustained growth rate (SGR) of Medicare. This formula is the funding scheme used by government to pay doctors who take Medicare patients. Previously, it was set to fall by more than 20 percent, a move strongly opposed by doctors. The pay raise for Medicare physicians will cost nearly $23 billion – money that will be added to the debt.
The bill also contains a host of other spending and tax items including agriculture subsidies, a youth jobs program, clean energy credits, transportation funding for states, and a tax credit for movie producers.
House Democrats are having trouble gaining enough votes to pass the measure after they exempted most of its spending items from the PAYGO (“Pay-as-You-Go”) requirements they passed in 2009. Those requirements mandate that Congress offset all tax cuts or new spending by either raising new taxes or cutting spending elsewhere. When writing those PAYGO rules, however, Democrats carved out exceptions that they have routinely exploited.
One such exception is for so-called “emergency” spending. Democrats have used this loophole to justify regular extensions of unemployment benefits, even though they know that the benefits will eventually expire.
They also carved out an exception for the Doc Fix because it is related to entitlement and not discretionary spending. The fix contained in the House bill would only extend the higher payments until 2012, when Congress will have to decide again whether to keep payments high or allow them to reset – a move which could save hundreds of billions of dollars by 2020.
The bill also includes higher taxes on carried interest and corporations who do business overseas. Billed by Democrats as closing “foreign tax loopholes” these tax increases provide the majority of offsets identified by the CBO -- a net increase of $43 billion by 2020.
These tax hikes more than make up for the estimated $22 billion in tax credits and incentives calculated by the CBO. The bill does not contain any permanent reduction in tax rates, merely temporary credits and other tax gimmicks designed to incentivize economic activity without ever permanently denying the government a source of revenue.