Californians vote tomorrow on six ballot measures addressing their state's perennial budget problems. If nothing passes, California will face a $20 billion budget shortfall. If everything passes, the deficit drops to—drum roll, please—$15 billion. Big numbers but not unusual for the Golden State. The bigger issue is whether California, or any other state, should budget by initiative.

Taxes aren’t just for grown-ups. In fact, our new Urban/Brookings study estimates that 40 percent of all federal expenditures spent on infants and toddlers flows through the tax system. That’s more than $22.8 billion. The two main programs that drive this spending are the earned income tax credit (EITC) and the child tax credit (CTC). Although both allocate fairly large percentages (18%) of their total program expenditures to families with infants and toddlers, they differ dramatically in the benefits that are refundable and those that are not. The EITC is fully-refundable, so in 2007 (the most recent year of available data), almost 90 percent of benefits received by families with infants and toddlers ($7.1 billion) came as a tax refund. In contrast, only one third of the partially refundable CTC benefits ($2.8 billion) were refundable, so most of CTC’s benefits reduced tax liability but failed to put cash back into needy families’ hands.

Last month I posted depressing state revenue data showing that total state tax collections fell in the last quarter of 2008 for the first time since 2002. I predicted that the situation was “going to worsen before it gets better,” a pretty safe bet given the continuing deterioration of state economies.

Medicare’s Part D drug benefit is going to cost taxpayers a lot of money. A really, really lot of money. You can find the story deep in the bowels of the Medicare Trustees report that was released earlier this week. It is a nice little case study of how a well-intentioned government program can add tens of billions of dollars annually to the federal deficit. And it is a cautionary tale of how hard it will be to bring medical costs under control, despite the promises of the Obama Administration and industry lobbyists.

On Tuesday, I participated in a Health Care Financing Roundtable at the Senate Finance Committee. Instead of the usual hearing format, a baker’s dozen of experts sat at a long table and waited to field questions. We were invited to submit statements, but had no opportunity to deliver them.

For years, lawmakers have been looking longingly at “the tax gap” as a way to help close the budget deficit. Each year Americans owe as much as $350 billion more in federal taxes than they pay. So, goes the argument, if we can only find ways to collect those dollars, we’d be a long way towards getting the fiscal house back in order.

President Obama promised during his campaign that he would raise taxes only on couples with income above $250,000 and singles with income over $200,000 but he never told us what he meant by income. In its 2009 Green Book, Treasury has finally filled in that blank. The administration’s tax proposals call for hiking the top two tax rates from 33 and 35 percent to 36 and 39.6 percent and raising the threshold to get into the new 36 percent bracket. For couples, that bracket would start at $231,300 in 2009, up from $208,850; the starting point for singles would climb from $171,550 to $190,650. (The changes wouldn’t take effect until 2011 but it’s easier to use 2009 values and the basic idea is the same.)

Today’s letter from key health industry players to President Obama promising to “do our part” to control medical care cost growth is a big deal. It sends a powerful message that “Harry and Louise,” the fictional couple who became the symbol of the medical establishment’s opposition to Clinton-era health reform, have retired to a condo in Florida.

Recently, Senator Jeff Bingaman (D-NM) and Senator Charles Grassley (R-IA) introduced bills that would discourage private investment in toll roads through public-private partnerships (so-called P3s). Notable examples of this type of investment include the long-term concessions for the Chicago Skyway and the Indiana Toll Road that were granted to private toll road operator-investors.

When President Obama proposed international tax reforms on Monday, the biggest surprise was a provision that would prevent parent companies from making foreign affiliates “disappear” for U.S. tax purposes. How do you make an affiliate disappear? Since I have not taken the magicians oath, I’ll tell you. But here’s one clue: It is perfectly legal under the so-called “check-the-box” rules.