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Sandy relief bill eats up taxes on the rich

Lawmakers to approve $50B

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National Guardsmen Spc. Ivan Pimentel (left) and Pfc. Harry Cadet walk past a house on the beach in the Rockaways on New York’s Long Island on Thursday that was ravaged by Superstorm Sandy in October. They were going door-to-door to determine if residents needed portable heaters or other items in the wake of Sandy. (Associated Press)

Congress is poised to clear the final $50 billion chunk of emergency aid for Superstorm Sandy relief Monday — and in one vote, it will have used up all the new tax money President Obama won by raising rates on the wealthy in the “fiscal cliff” deal.

The tax deal that Congress and Mr. Obama reached in early January cut taxes overall but let them rise on individuals making more than $250,000 a year and families with income of more than $300,000. Those increases brought the government somewhere on the order of about $40 billion for fiscal year 2013.

The spending bill for storm recovery costs $50 billion and, coupled with an additional $9.7 billion in flood insurance money Congress passed this month, brings the total tab for Sandy to $60 billion.

Sen. Mike Lee, Utah Republican, will offer an amendment in the Senate on Monday to try to offset the $50 billion by an across-the-board half-percent cut, but it is expected to fail, meaning almost the entire $60 billion will have been tacked onto the deficit — more than eating up the money gained from the additional taxes.

“The Sandy aid packages swallowed more than the tax increases,” said Matt A. Mayer, a visiting fellow at the Heritage Foundation who has been tracking Sandy spending. “Washington just doesn’t get the severity of our fiscal condition.”

The Sandy spending is emergency funding that is added to this year’s balance sheet, while Mr. Obama’s tax increases will produce revenue into the future.

The Joint Committee on Taxation, which scores tax bills for Congress, said raising the income and investment tax rates and patching the alternative minimum tax will lead to $574.4 billion more in revenue over the next decade, compared with a scenario in which Congress had extended all Bush-era tax cuts.

The Sandy spending is on a glide path through Congress, nearly three months after the storm struck the Northeast, killing more than 130 Americans, flooding hundreds of thousands of homes and damaging public infrastructure such as the New York City subway system.

Governors and lawmakers from the affected areas have been begging for the money to move, but it faced roadblocks first in the House, where Republicans balked at bringing it to the floor for a vote, and then in the Senate.

After swearing in new senators Jan. 3, the upper chamber adjourned for two weeks. When they returned last week, they spent most of their time stalled over whether to change the rules on filibusters.

“It’s long overdue,” Senate Majority Leader Harry Reid, Nevada Democrat, said last week regarding Sandy relief.

Of the $50 billion in the latest package, nearly $20 billion would go to repairs on roads and infrastructure, $4 billion to the Army Corps of Engineers and more than a half-billion dollars to the National Oceanic and Atmospheric Administration.

Senators did manage to require offsets for some $3 billion of the Sandy relief bill when they voted on a different measure last year, and those offsets have been carried through.

Conservative groups have tried to rally opposition to the Sandy bill, announcing that they would grade lawmakers in their year-end report cards on how they vote.

“Instead of passing a pork-filled bill packed with non-emergency spending items, Congress should pass a disaster relief-only bill that is fully offset with spending cuts elsewhere and contains measures to ensure accountability over billions in taxpayer dollars,” the free-market Club for Growth said in its letter to congressional offices.

But most lawmakers argue that Congress always has covered costs to recover from natural disasters and that this time should be no different.

They also point to emergencies while Republicans were in power, including Hurricane Katrina, which struck New Orleans and Mississippi in 2005. The Republican-controlled Congress and President Bush pumped tens of billions of dollars into recovery and reconstruction without offsetting the cost.

The Congressional Research Service said that of 59 emergency spending bills passed since 1990, only six were fully offset by cuts elsewhere. The agency said that would be difficult in this situation because the request was so large.

Most of the Sandy money won’t be spent until fiscal year 2014, but Northeast lawmakers wanted it budgeted now.

The government is projected to run a deficit of about $1 trillion in fiscal year 2013, which began Oct. 1. Revised estimates are due next week from the Congressional Budget Office.

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Stephen Dinan

Stephen Dinan can be reached at sdinan@washingtontimes.com.

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