March 21, 2007

Republicans Accuse Democrats of Trying to Pay the Bills!

The conservative spin-machine is running at full-speed to portray the Democrats' decision to block additional deficit-financed tax breaks as wildly unfair and disasterous for the economy. (For background about the Congressional budget battle, visit the budget section of our Congressional issues page.)

Take this gem from the Wall Street Journal:

Senator Kent Conrad and his fellow Democrats proposed their five-year budget outline, or at least that part of it they're willing to discuss in public. Mr. Conrad, the Senate Budget Chairman, pulled off the neat magic trick of claiming his budget includes "no tax increase," even as it anticipates repeal of the Bush tax cuts after 2010.

Bull. The Democrats are not trying to repeal any Bush tax cuts. If only we were so lucky. The Dems may let some of the Bush tax cuts expire at the end of 2010, and it was the legislation enacted by the President and Congress during their six years of one-party control that contained that expiration date. The Republicans basically wanted to use procedural mechanisms (rules allowing approval of the tax cuts by a simple majority if they did not increase deficits outside a ten-year budget window) and also wanted to force the issue of tax cuts up for a vote again in the future. Whatever the motivations of the Republicans, they decided that their tax cuts would end at the end of 2010, so any extension of the tax cuts requires new legislation and constitutes new tax cuts.

And the Democrats are not even saying that tax cuts will expire. The budget approved by the Budget Committee in the Democrat-controlled Senate merely says that if the tax breaks are to be extended past 2010, Congress needs to find a way to offset that revenue loss (through decreased spending or increased revenues) rather than just increasing our borrowing.

The idea of borrowing the money to finance a tax cut is absurd and it's incredible that this rule, called pay-as-you-go or PAYGO, is even controversial. What's more incredible is the lengths the Republicans are going to portray this common sense policy as wild-eyed big government liberalism.

For example, the ranking Republican on the Senate Budget Committee, Judd Gregg (R-NH) was reported by BNA (subscription required) as saying

"The Democratic budget as proposed will increase taxes or revenues by approximately $916 billion. It will increase non-defense discretionary spending by approximately $140 billion."

The $916 billion estimate includes the expected five-year cost of extending the 2001 and 2003 temporary tax cuts, extending other expiring provisions, indexing the AMT for inflation, and the interactive effect of the AMT and rate changes.

So, if I get this right, the Democrats are being accused, in an outraged tone, of saying "no" to more borrowing? The Democrats are being blasted because they don't want to increase the budget deficit and the national debt?


Post a Comment

<< Home