The more we learn about the 2008 budget being crafted by Democratic leaders in the Senate and House, the more expensive it gets. Last week we observed that the only way Democrats could match their draft 2008 budget’s assumption on tax revenues was to let the Bush tax cuts expire as scheduled in 2010. Doing so would result in “the biggest tax increase in American history,” we said.
That observation didn’t sit well with one of the Democrats’ key allies in the think tank world, the Center for Budget and Policy Priorities. Yesterday, CBPP issued a carefully worded statement denying that the Democrats’ budget plan amounted to a tax hike: It “simply assumes the same level of revenues over the 2007-2012 period as projected by the Congressional Budget Office under its current-policy baseline, which essentially assumes no change in current laws governing taxes.” Current law specifies the 2010 expiration date, when the levies will return to their previous, higher rates. As Senate Budget Committee Chairman Sen. Kent Conrad, D-N.D., hassaid, “a tax increase to me is when you increase the taxes that people are paying now.”
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The Heritage Foundation’s Brian Riedl notes that allowing the Bush cuts to expire as scheduled will mean approximately $900 billion in higher assessments over five years and nearly $3.3 trillion more in 10 years. That’s nearly $2,700 per household. The final amount depends upon whether the Alternative Minimum Tax is changed and if Democrats opt to extend some of the Bush tax cuts for some taxpayers. As we said last week, Democrats ought to be upfront about this enormous tax hike.
Something else Democrats should be more upfront about is the 30 “reserve funds” in the draft 2008 budget. A reserve fund is a sort of legislative hidden-ball trick that authorizes Congress to spend additional billions on favored programs so long as either spending elsewhere in the government is reduced or taxes are increased by an equivalent amount. For example, Section 306 of the draft 2008 budget includes a reserve fund worth an additional $15 billion in farm aid. But does anybody seriously think Congress will reduce spending somewhere else by $15 billion? Whoops, here comes another tax hike!
As we’ve asked before and will no doubt ask again, why can’t Washington politicians just tell us the truth?
