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22 Tax Foundation's Washington News 1 (1970)

handle is hein.tera/wingnews0024 and id is 1 raw text is: January 16, 1570 Vol. 22 No. 1 1725 K Street, N.W. Washington, D. C. 20006 CONGRESSIONAL ACTIONS AFFECTING THE FISCAL 1970 FEDERAL BUDGET The budgetary actions of the First Session of the 91st Congress? which adjourned on December 23, 1969, were highlighted by (1) enactment of'the comprehensive Tax Reform Act of 1969, (2) delays and controversy surround- ing approval of the annual appropriation bills, and (3) approval of a com- plicated ceiling on fiscal 1970 spending, the effects of which are im- possible to predict and probably will not be known until after the final budget figur;s b.come available next July. The latest official budget estimates, presented last September, pro- jected receipts at $198.8 billion, outlays at the original Nixon budget total of $192.9 billion, and a surplus of 15.9 billion. A preliminary analysis of the actions taken by the Congress in the session recently end- ed -- plus the certainty of substantial increases in certain uncontrollable expenditures (such as interest) --- suggests the Administration will be hard- pressed to hold outlays to $192.9 billion, To the extent expenditures in- crease, of course, the projected budget surplus will be reduced. It is impossible at this point to get a clear fix on the results of Congressional budgetary actions. A number of issues which can have a major impact on fiscal 1970 expenditures remain to be resolved in the new session, which convenes January 19. Action on two of the 1970 appropriation bills, providing funds for foreign assistance programs and the Departments of Labor and Health, Education, and Welfare, has not yet been completed. The Labor- HEW bill, in particular, involves substantial increases in the President's budget requests. It is expected to be cleared shortly after the Congress reconvencs,and will be vetoed by President Nixon. If that veto is not sus- tained these increases could have a significant impact on fiscal 1970 spend- ing. In addition, there are a number of legislative measures pending, al- ready passed by either the House or Senate -- including another Federal pay increase bill -- which could also significantly affect the budgetary result. Tax Reform The Tax Reform Act of 1969 (Public Law 91-172), primarily because it provides for extension of the income tax surcharge at the 5 percent rate through June 30, 1970, as :ell as for extension of certain excise taxes, provides substantial revenue in the current fiscal year. In subsequent years, however, when the income tax relief features of the act become opera- tive, total revenues will be reduced. The table which follows sets forth estimates prepared by the staff of the Joint Committee on Internal Revenue Taxation, indicating the revenue effects of the tax reform legislation.

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