[TheMercenary]

State governments have spent above their means for years. Further bailouts from Washington will only delay the inevitable: States must cut back on spending to more sustainable levels. In the short term, more money from Washington only incentivizes states to continue spending well above what they can afford as Congress continues to cover for their profligacy.

It is time for Congress to stop facilitating the reckless spending of the states. Postponing the day of reckoning any longer is throwing good taxpayer money after bad and makes choices even harder for the states.

Premature Action on Oil Spill. The Oil Pollution Act of 1990 sets out the means by which the federal government leads oil spill cleanup efforts and pays for the costs. Generally, the responsible party—in the current case, BP—is on the hook for all the cleanup costs, plus up to $75 million in compensation for damages. Beyond the $75 million, an oil spill liability trust fund created via a tax on oil provides an additional $1 billion per event. H.R. 4213 raises this amount to $5 billion and increases the tax from 8 cents per barrel to 32 cents to fund it. Raising the cap may be reasonable, though the tax increase is excessive and premature.

At this early stage, too few facts are in regarding the oil spill for legislative measures to make sense. And in any event, new laws would not affect ongoing cleanup activities, so there is no reason to rush. Once the facts are in, some changes to oil spill laws may be warranted—but now is not the time to increase taxes on energy. And certainly not in a tax extenders bill.

Defined Benefit Pension Funding Rules. A traditional or defined benefit (DB) pension plan pays retired workers a set benefit, usually a percentage of their pre-retirement income for every year that the worker was employed by the company. The financial health of private-sector DB pensions depends on regular contributions, investment earnings that reach at least a predicted level, and retirees living (and thus receiving benefits) as long as expected. Prior to 2006, when funding rules were tightened, employers were able to avoid cash contributions and could raise promised benefits even if the plan was seriously underfunded.

Because of the recession, certain employers may have to lay off additional workers in order to fully fund their pension plans. The pension relief sections of H.R. 4213 temporarily ease funding requirements for both single-employer and multi-employer pension plans to give them more time to rebuild losses from 2008 and after. At the same time, they still restrict plans from increasing benefits unless the increases are fully and separately funded. This combination is appropriate for the circumstances, but additional pressures for yet more funding relief should be resisted so that the days of irresponsible funding decisions and unpaid-for benefit increases cannot return.

Extension of Temporary Assistance for Needy Families. Included in the extenders package is a $2.5 billion extension of the Temporary Assistance for Needy Families (TANF) emergency fund. The Senate beat back an earlier attempt to include this provision in the FY 2011 budget; however, House leadership has managed to include it in the conference agreement. If passed, this would undo the historic welfare reform of 1996.

The TANF Emergency Fund, originally created as part of the stimulus package, was meant as a "temporary" measure. The President, and now Congress, are intent on extending it another year. This anti-reform fund would pay states for increasing their welfare caseloads, providing no incentive to help people into jobs.[8] Such action would completely reverse the successful 1996 reform that helped to move millions of families out of poverty and into self-sufficiency. President Obama has sought to curb this success in the name of "stimulus." His FY 2011 budget aims to extend this program for another year at a price of $2.5 billion.

Stick to Basics

Before H.R. 4213, the tax extenders were already a yearly occasion for Congress to raise taxes under the guise of faux fiscal discipline. Congress has now taken this one step further by using the tax extenders as vehicle to significantly increase spending and the deficit. It is time for Congress to make the tax extenders permanent so it cannot use their annual extension to increase the size of government.

Congress should make all the provisions in the tax extenders that are good policy permanent[9] and allow the ones that are not to expire. It should then cut other taxes to make sure the reforms are revenue-neutral. If it takes these steps, Congress will have one less way to raise taxes and sneak through this kind of irresponsible spending increase in the future.

http://online.wsj.com/article/SB1000...FTSecondBucket