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Democrats Assail Bush Budget Plans, Tax Cuts
Jan. 31 — WASHINGTON (Reuters) - U.S. Democrats accused President Bush on Saturday of targeting programs that benefit ordinary Americans to address a record federal budget deficit while advocating more tax cuts for those who need them least.
Bush will roll out his fiscal 2005 budget on Monday. It is expected to forecast a huge deficit of $521 billion this year, but also to propose making permanent his 2001 and 2003 tax cuts at a cost of nearly $2 trillion over the next 10 years.
U.S. Rep. Brad Miller of North Carolina said in the party's weekly radio address the budget would do little for the millions of workers without jobs even as the U.S. economy shows signs of recovery.
"Tax cuts that pile on to the largest deficit in our history will not help those folks find jobs," he said. "Deficits drag the economy down, increase interest rates, and leave a staggering debt for our children to pay."
Facing a near-revolt from conservative Republicans worried about the worsening budget outlook, Bush will also propose an effective freeze on the growth of federal discretionary spending next year outside of defense and homeland security.
But Democrats, and some moderate Republicans, are already warning that will do little to reduce the deficit and may mean painful cuts in popular programs ranging from veterans' medical care to medical research and law enforcement."
"We Democrats are all for cutting wasteful spending," Miller said. "But last year President Bush thought health care for veterans was wasteful spending and he put funding for education in that category too."
"We've got to restore fiscal responsibility to the federal budget. And we've got to do it in an honest and straightforward way," he said.
Consumer Groups Slam Tax Refund Loans
Consumer Groups Criticize Tax Refund Loans As Costly; High Fees Charged to Lower Income Workers
The Associated Press
WASHINGTON Jan. 29 — Two consumer groups reported Wednesday that taxpayers paid $1.5 billion in high fees in 2002 to get immediate loans on their expected tax refunds.
Taxpayers can get such loans from their tax preparers instead of waiting for the Internal Revenue Service to issue a check for their return, as long as they pay a fee for the service.
The Consumer Federation of America and the National Consumer Law Center, using data from the IRS, said one in 10 Americans chose to get a refund anticipation loan from a tax preparer in 2002. More than half were lower income workers who claimed the earned income tax credit.
The groups said the fees charged for the loans undermine the earned income tax credit program by siphoning off money intended to help working families make ends meet. The credit returned more than $36 billion to more than 20 million recipients last year.
"These fees transfer billions in wealth, paid out of the U.S. Treasury, from working poor families to multimillion-dollar corporations," said Chi Chi Wu, an attorney with the National Consumer Law Center.
The advocates said loan fees ranged from $20 to $105, with an additional $28 to $58 in administrative fees. The effective annual percentage rate for the loan can range from 70 percent to 700 percent, they said.
The company that services the most refund anticipation loans, Household International, said the annual percentage rates for its loans range from 34 percent to 129 percent, roughly equivalent to the charge for a cash advance from a credit card.
Company spokesman Mark Friedlander said all families should have access to a variety of financial options.
"It is of utmost importance that all customers, especially those customers facing financial challenges or living on a limited budget, are provided with complete information on the products they are considering," he said.
"With this information in hand, Household believes financial decisions should be left to the families."
Senate tax-writers next week plan to debate a bill that would require refund anticipation loan providers to register with the IRS. The bill would also give the Treasury Department authority to set guidelines for how and when lenders must disclose their fees.
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