This Wednesday, the U.S. Senate voted on five different budget proposals. Each of the four Republican plans were defeated by comfortable margins, but President Obama’s plan suffered the worst defeat — a unanimous 99 to 0. It was not the first such vote. Not only have Senate Democrats failed to pass a budget in over three years, but not a single Democratic senator has voted for any budget brought to the floor over that time period.
In a meeting with The Washington Examiner’s editorial board on Thursday, House Budget Chairman Paul Ryan, R-Wis., offered a theory as to why this is so. “They don’t want to show you what their vision of government costs,” he said. Because the Democrats are studiously avoiding entitlement reform, “the kinds of tax increases you would have to see, on paper, to avert a debt crisis, are the kinds you have never seen before … They would rather take the knock that they’re doing nothing than show you what they would do if they could do it.”
How high would taxes have to go to sustain projected increases in spending? In a May 19, 2009, letter to Ryan, the director of the CBO explained that in order to balance the long-term budget with tax increases alone, the 10 percent tax bracket would have to rise to 25 percent; the 25 percent bracket would have to rise to 63 percent; and the highest individual bracket (as well as the corporate tax) would have to rise from 35 percent to 88 percent.
But that’s just on paper. In reality, CBO’s director wrote, “Such tax rates would significantly reduce economic activity and would create serious problems with tax avoidance and tax evasion. Revenues would probably fall significantly short of the amount needed to finance the growth of spending; therefore, tax rates at such levels would not be feasible.”
The CBO director who authored this letter was none other than Peter Orszag, who went on to serve as Obama’s budget director. And the dire scenario he outlined at that time has since worsened, thanks to the economic collapse and Obama’s subsequent spending spree.
Greece, with an economy 1/50th the size of the United States, is now threatening the economic standing of all of Europe because of its debt burden, which was 143 percent of its gross domestic product in 2010. The U.S. is on pace to match that dubious distinction in under 20 years, according to the CBO’s most recent long-term budget outlook.
Senate Democrats have argued that they don’t need to pass a budget because spending levels were set by last summer’s deal to raise the debt ceiling. But that deal didn’t include reforms to put America’s entitlement programs on a sustainable fiscal path. A real budget — the kind Senate Democrats have avoided — would at least create a path to sustainability, even if the Democrats are unwilling to walk it. A budget would make room for a bill that could improve the finances of the entitlement programs. The longer Democrats drag their feet on making a budget and reforming entitlements, the harsher the medicine will eventually be for all Americans — and especially for those who depend most on government programs.
