Visiting Sweet Home last week, U.S. Rep. Peter DeFazio said that President Bush is taking a surplus prediction and proposing tax cuts, with persons at the top receiving more than half of the benefits from the cut.
“What he’s proposing is based on (the most optimistic) predictions,” Rep. DeFazio said. Baseline surplus projections by the Congressional Budget Office would not leave enough room for the proposed tax cuts without running a deficit. The most pessimistic projections are deficits and no room at all for a tax cut.
The projections range from a $100 billion deficit to a trillion dollar surplus, Re. DeFazio said. If economists were good at making the predictions, “they wouldn’t be working for a government check.”
In the last 20 years, projections were accurate only two years, 1986 and 1989.
With additions to President Bush’s $1.6 trillion tax cut, Rep. DeFazio said, the true cost would be $2.6 trillion. Among those additional costs are making a small part of he cut retroactive, extending a number of expiring tax credits and additional interest payments from paying the down the debt slower.
In the tax cut, the middle 20 percent income group would receive an average cut of $509, 8.4 percent of the tax cut. The top 1 percent would receive $54,480 in cuts, 45 percent of the total cut.
“I think we ought to take a more cautious approach,” Rep. DeFazio said. DeFazio is proposing dividing non-Social Security and non-Medicare surpluses into thirds. A third would be used for debt reduction. A third would go to a tax cut targeted toward those without means, and a third would be aimed at future spending needs. If the projected surpluses materialize, the proposal would provide approximately $900 billion in each area.
“We will be very vigorously having this debate in the coming months,” Rep. DeFazio said. Once Congress has the president’s proposal for military spending, it will have a better picture of President Bush’s plan.
Rep. DeFazio also addressed deregulation of power utilities, the shortage in California and the rising cost of energy.
“I opposed deregulation,” Rep. DeFazio said. “Unfortunately, I was more right than I could have predicted.”
Electricity shortages and the high cost of power is going to crash California’s economy and put hundreds of businesses out of business, Rep. DeFazio said. Now, the problems are coming to the Northwest because of the drought and the Bonneville Power Administration cannot afford to buy additional power. As a result, the BPA is looking at large increases on Oct. 1 “unless the government takes action to control the wholesale price.”
President Bush has appointed a man to head the Energy Commission who is unwilling to investigate price gouging by power companies, five or six companies that are making large profits on deregulation.
“It’s one of the boldest sorts of fraud I’ve seen in a long time,” Rep. DeFazio said. A few businesses are profiting at the expense of others. Rep. DeFazio is awaiting the outcry.
All of the electricity used in California just a couple of years ago sold for $7 billion. Use has increased only by 4 percent in that time, but this year, that power will cost $27 billion.
“There’s increasing market manipulation in California,” Rep. DeFazio said. The state was using only 60 percent of its generation when the lights went out last winter.
“There were a lot of generation plants that were just shut down,” Rep. DeFazio said. The lights are going out again this summer, no matter what.
In a deregulated market, “you have no duty to keep the lights on,” Rep. DeFazio said. To keep the market stable, it needs about 15 percent extra power.
“The whole point is deregulation doesn’t work,” Rep. DeFazio said. “We don’t need it.”
The Northwest had the cheapest power in the states, and the United States had the cheapest power in the world, Rep. DeFazio said. “It worked really well for 60 years until Congress deregulated in 1992.”
Rep. DeFazio visited the Oregon Capitol to lobby against deregulation in Oregon. Oregon legislators are considering plans to delay deregulation, which is to take effect in October.
Nationally, “regulation has become like a dirty word,” Rep. DeFazio said. Right now, the national government is not looking hard at the issue, but “I think this summer, if there’s a heat wave in the Midwest or the Northeast, it’ll get their attention.”
Rep. DeFazio is working on a bill to reregulate the industry. He also is looking for an attorney to possibly start a lawsuit because prices were “unjust and unreasonable.”