According to this budget, President Bush's second to last, the administration can balance the budget--and even create a surplus of $61 billion by 2012--while extending tax cuts and continuing to fund national security programs.
It all sounds very nice--as all presidential budgets do. But even as the ink was drying this morning, the Democratic chairs of the budget committees in both the House and Senate were attempting to debunk the administration's rosy predictions. In what Rep. John Spratt of South Carolina called a "quick and dirty take" on the budget a few hours after it was released, he and his Senate counterpart, Kent Conrad of North Dakota, painted the budget as deliberately ignoring political and economic realities.
At issue here is the alternative minimum tax, a complex secondary taxing system that was originally designed to prevent a small number of high earners with high deductions from escaping paying any or all income tax. But because of the AMT's rather arcane rules, the AMT now snags more and more people every year, and it threatens to engulf thousands of taxpayers in the next three years. The Tax Policy Center estimates that, according to the current law, 32 million people will be paying more taxes under the AMT in 2010, producing over a trillion dollars in revenue.
The odds that Congress will allow this to happen are approximately zero. But that would-be-but-won't-be revenue, Spratt says, is accounted for in the president's balanced budget, padding his estimates for future receipts.
Conrad's staff referred inquires to his statements this afternoon, accusing Bush of "heading us for the cliff and a plunge into a chasm of debt." In response, Sean Kevelighan, a spokesman for the Office of Management and Budget, which prepares the budget, called the proposal a "very realistic budget." In a press briefing this afternoon, OMB Director Rob Portman said all future costs for the war were factored into the deficit projections--a claim the Democratic lawmakers also disputed, saying the long-term costs of the war would be much greater.
But a larger question of relevancy looms over this proposal. Congress still has not enacted many of the spending bills from Bush's fiscal 2007 budget, released at this time last year, even though Bush's party controlled both chambers till last month. Instead, lawmakers passed "continuing resolutions," bills that averted a partial government shutdown by continuing to fund agencies at the previous year's levels.
With Democrats now in charge, it's hard to imagine the process of enacting the president's budget will get a whole lot faster.
By Chris Wilson