WASHINGTON - President Barack Obama’s proposed budget, which Congress will continue to delve into this week, includes billions of dollars in new user fees and taxes.
Smokers, airline passengers and cattle ranchers with animals on federal land will all pay more, if the White House has its way.
The administration’s plan also calls for increases in fees in such areas as customs, food inspection and electronic health records.
Unable to come to an agreement on tax policy, Obama and lawmakers on Capitol Hill have been stymied in their efforts to substantially slow the growth of the federal budget deficit.
Speaking at a food-safety conference in Washington in April, U.S. Sen. Mark Pryor, D-Ark., said it is difficult for the federal government to accomplish its goals, such as ensuring that food doesn’t put Americans’ health at risk, at current spending levels. Without the political will to raise income taxes, policymakers must look at other options, he said.
“A natural way to do that is to increase fees,” Pryor said. “You’re going to start seeing this around the government. The taxpayer dollars just aren’t there now.”
The proposed Food and Drug Administration budget submitted by Obama would increase the agency’s spending level by $500 million for the fiscal year that starts Oct. 1, raising total annual spending to $4.7 billion. Most of the proposed increase - 94 percent - would come from several fees designed to pay for provisions in the Food Safety and Modernization Act of 2011, a law designed to prevent food-borne illnesses. For example, fees could be charged on food importers and on food-processing facilities’ registrations and inspections. Consumers will ultimately foot the bill, critics say.
Peter Sepp, executive vice president of the National Taxpayers Union, said his group is “generally supportive” of legitimate user fees. People who pay them often benefit directly from the government service the fee pays for, he said.
However, Sepp said, federal fees are often diverted into the Treasury’s general fund so they can be spent elsewhere.
For instance, Sepp pointed to the White House plan to raise passenger-security fees attached to airplane tickets. Currently, the fees are $2.50 per passenger for the first leg of a trip, with a maximum payment of $5 for a one-way trip. The president’s budget proposes a minimum fee of $5, rising to $7.50 by 2019.
About $8 billion of the revenue generated by the fee increase in its first 10 years would be used to increase airport security. The remaining $25.9 billion, the Office of Management and Budget says, would be diverted to the Treasury.
“The term can be abused by politicians looking for an easy way to raise revenues,” Sepp said of user fees. “It’s a deceptive way to fund government.”
U.S. Rep. Tim Griffin, R-Ark., said fee increases shouldn’t be used simply to expand the size of government.
“Agencies shouldn’t be able to ‘plus up’ what they need through more fees,” Griffin said. “If they just raise the fee, they don’t have to make the hard choices.”
However, Griffin said, there are times when a fee makes sense. For instance, he has sponsored legislation that would create a veterans identification card.
He said the legislation is “revenue neutral” and that veterans will pay a fee associated only with making the cards.
“If you want a card, you’d pay five bucks or whatever the fee is,” he said. “That is entirely appropriate.”
In his budget, Obama proposes to raise $78 billion over the next 10 years by raising the federal tax on cigarettes from $1.01 per pack to $1.95 a pack. The revenue would be used to fund early-childhood education programs.
The tobacco industry called the plan a regressive tax that hits low- and middle-income Americans disproportionately.
“It is patently unfair to single out adult tobacco users with another federal tobacco tax increase to pay for a broad, new government spending program,” said David Sutton, a spokesman for Altria, the parent company of Philip Morris.
In addition to paying for a new education program, the proposed tax increase makes it more expensive for people to smoke, which is a good thing, said Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities.
“It’s designed to reduce smoking because [smoking] kills people,” he said.
Marr said user fees and dedicated taxes have to be judged on their broader benefit. He said it is appropriate to charge people who use federal facilities, such as national parks. But he cautioned that user fees need to be low enough so as not to discourage broad use of federal services.
Several agencies are already substantially funded by their own discretionary taxes, rather than congressional appropriations, Christopher DeMuth, a fellow at the Hudson Institute, wrote in a paper in February. The Hudson Institute is a conservative research organization in Washington.
DeMuth warned about an increase of power in the executive branch of government. As an example, he cited the Federal Communications Commission, which receives its $347 million operating budget from the payments of the companies it regulates.
“These agencies are autonomous special-purpose national governments, and they set and collect taxes in businesslike fashion, without legislative fuss and bother,” he wrote in a policy paper distributed by the Hudson Institute.
According to the Government Accountability Office, when Congress passed the Independent Offices Appropriations Act of 1952, it gave federal agencies “broad authority” to assess fees on beneficiaries by administrative regulation, rather than by Congress.
The Office of Management and Budget calculated that user fees rose from $138 billion in 1999 to $233 billion in 2007.
In their budget request, the agencies that fund U.S. Customs and Border Protection asked Congress to give the go-ahead to assess $360 million in new port and immigration fees. The money would be used to hire 1,877 additional border patrol agents.
In making their request to Congress for the new fees last month, managers from the U.S. Border Patrol and U.S. Department of Homeland Security wrote that the additional agents would facilitate international trade and have the “ripple effect” of creating 115,000 new jobs, while leading to 80,000 more law-enforcement actions, such as arrests and drug seizures.
Front Section, Pages 1 on 05/05/2013