Tuesday, Feb. 6
Posted 3:20 p.m. EST

Budgetary wish list

When is an American president like a kid at Christmas? When he sends Capitol Hill his annual wish list, known officially as the annual budget proposal.

Monday was Merry Budget Day in Washington, D.C. The White House delivered to Congress its 2008 budget proposal. And many in Congress responded with the traditional greeting: It's dead on arrival. Not quite the same Kumbaya sentiment of bipartisan spirit we heard from both sides just a few weeks ago.

That does not mean, however, that this particular president and Congress are having a particularly contentious meeting of the fiscal minds. Despite the large numbers and important policies included in budgets, they tend to be working documents.

Essentially, the budget is a best-case scenario: If we could put this much money toward this project and cut these taxes, then everyone would be happy and all would be right with the world, or at least the United States. But every president knows that, just like when he was a kid, he's not getting everything he wants. (OK, maybe this president came closer than you and I to getting all of his annual Dear Santa requests, but you know what I mean.)

And Congress does enjoy playing the role of budget-conscious parents in this annual exchange. One by one, requests are unceremoniously crossed out without a second look. One item nixed before it even became official was the president's health care proposal to offer everyone a medical insurance deduction that would be funded in part by taxes (yes, Dubya actually proposed adding a new levy) on "excessive" employer-provided health care coverage.

But the budget process is a worthwhile exercise. Ideally, it gets ideas out in the public forum, where they can be debated and revamped and possibly, in some form, enacted.

You can check out the full, 122-page official "General Explanations of the Administration's Fiscal Year 2008 Revenue Proposals." Or you can go with the abbreviated, press release version, which I like to call Budget Lite. Either document might be a bit more palatable if read with a similarly named brew. Me, I prefer Dos XX.

Budget high points: A few items caught my eye on initial perusal of the FY08 budget.

The president wants various tax cuts that are scheduled to expire, for the most part, at the end of 2010, to be permanently extended. This is a perennial request by the Administration. Expect it to be met the same way it usually is, with Congress deciding not to worry about these laws for three more years, when the absolute expiration deadline is bearing down.

Dubya wants more money for the IRS so that it can collect tax gap money. This is revenue the agency says it's owed, but that taxpayers are just not handing over. Current estimates put the lost tax cash at $290 billion. Beefing up enforcement here is a good idea, since everyone should pay what they owe. When they don't, it undermines the whole voluntary compliance foundation of the U.S. tax system, which in turns makes you and me pretty darn angry that we're pulling our weight while others are not.

Quick aside here: The new IRS Whistleblower Office now has a director, so if you know of a tax cheat you'd like to turn in, feel free to give the new guy something to do.

To close the tax gap, the White House wants more accountability when it comes to financial transactions, particularly those that typically rely soley on taxpayers to come up with the taxable gain they recognize. The plan calls for securities brokers, mutual fund companies and other institutions involved in these transactions to tell the IRS what their clients paid for the assets along with what they got when they sold them. Basically, it would be a reporting system for these activities that's along the lines of the W-2 process.

This transaction tracking idea might get some real traction on Capitol Hill, since it could help bring in money to pay for an idea at the top of lawmakers' lists: revamping the alternative minimum tax. Here, too, the Administration and Congress agree in principle.

So maybe this year there could actually be some happy budget returns.

Micro and macro budgeting: Just to show you how on-the-ball Bankrate is, our new collection of stories on budgeting to achieve financial harmony appeared on the site just days before the federal document was released. Give the series a read and maybe send the link to your Representative, Senators and even the White House. A refresher course on budgeting never hurt anyone.