New House Rules May Hamstring Deficit Reduction

Statement of U.S.
PIRG Tax and Budget Reform Advocate Nicole Tichon on the new rules
package to be considered today in the U.S. House of Representatives,
specifically the provisions around the budget.

"While the new Congressional
leadership's focus on federal budget deficits is admirable,
'cut-go' provisions that exempt special interest carve-outs and
corporate tax loopholes from the accounting process will only handcuff the
ability of Congress to seriously tackle the budget problem.

"Further, the specific provisions barring
discussion of wasteful handouts through the tax code -- handouts that were
fought for and won by armies of narrow interest lobbyists -- remove from
consideration a significant number of solutions that have broad public
support.

Under the proposed rules:

• Attempts
  to shut down off-shore tax havens cannot be considered in discussions of
  deficit reduction. These havens cost taxpayers an estimated $100 billion per
  year and go to those who benefit from access to American markets, workforce,
  security and infrastructure but pay little or nothing as they ship profits overseas.

• Tax
  expenditures that flow to BP, Exxon and others in the oil and gas industry
  are off the table. These tax breaks provide unnecessary incentives as they
  largely underwrite activities the companies would willingly do on their
  own.

• Ill-advised
  loopholes carved out of the tax code that let multi-millionaire hedge fund
  managers pay dramatically reduced tax rates - far less than the average
  American - are exempt from discussions on solving our deficit problem. This loophole has
  been criticized across the political spectrum from Paul Krugman to Pete
  Peterson.

"The proposed new rules have the dangerous
potential to undo recent bipartisan progress, including
recommendations of the Fiscal Commission to close a number of tax loopholes.
Some of the few moments of bipartisan agreement in recent memory can be
attributed to the need to end special interest influence and reform the tax
code. These rules may in fact thwart the rising awareness that wasteful
spending through the tax code is no different than wasteful spending through
the appropriations process.

"Closing ill-advised tax loopholes, ending
special interest carve-outs and corporate tax breaks do not equate to
tax increases. Turning a blind eye to this type of waste and forbidding these
common sense reforms has the potential to undermine any serious steps toward
a sustainable federal budget.

"We urge the House to reject these
provisions."