Senate Republicans claim Senate Democrats in coming months will suddenly “discover” that America desperately needs $400 billion in new spending. According to this scenario, the Democrats will say the $400 billion cannot be carved out of existing programs and will require ending President Bush’s tax cuts, which are scheduled to expire in 2010. For evidence, the GOPers cite the proposed 2008 federal spending plan unveiled by Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee. The Republicans are no doubt right but there is a much bigger problem here that neither they nor the Democrats are addressing.
No doubt the Democrats are playing short-term politics on the budget. Conrad claims his plan balances the budget by 2012 and reduces the percentage of the nation’s Gross Domestic Product consumed by federal expenditures starting in 2009. The Conrad plan spends $6 billion more on education than Bush proposes, $50 billion more on health care coverage for children and $3.5 billion more on veterans. Conrad also rejects Bush’s proposed budget cuts in law enforcement, heating assistance, transportation and community development.
Conrad claims Democrats can spend more than Bush for education, children, veterans, fighting crime, keeping people warm, and those earmark-stuffed areas of transportation and community development — all without raising taxes. To do so, he said, Congress must prepare for “fundamental tax reform” by closing the tax gap of $345 billion. The tax gap is tax revenues that should be collected under current law but which don’t endup in the federal treasury because of what Conrad termed “abusive tax havens” and “tax scams.”
But Washington politicians in both parties have used such illusory projected savings from supposedly improved tax collections since the Reagan era. Conrad knows such savings are nothing more than accounting gimmicks used to persuade naive rubes beyond the Beltway that Washington is being responsible about spending. But never mind. Given all the whining from Democrats over Bush’s tax cuts since 2001, nobody should be surprised in coming months when Conrad and his Senate allies argue that the Bush tax cuts are also abusive and should be repealed because they favor “the top 1 percent.”
The bigger problem is the coming explosion in entitlement spending occasioned by the baby boomer generation’s retirement. Without major reforms now, mandatory spending on Social Security, Medicare and Medicaid will in the near future begin crowding out virtually everything else in the federal budget. As the accompanying chart illustrates, either benefits will have to be cut or federal taxes massively increased. Conrad called his spending plan “responsible” even as he admitted last week that it doesn’t address this harsh reality. As long as Washington refuses to address the entitlement spending explosion with credible action, no budget spending plan will deserve to be called responsible.
