The Senate budget resolution, which will be voted on later this week, is quite similar to the House budget resolution, which the Heritage Foundation analyzed yesterday.
Heritage Foundation Senior Policy Analyst Brian Riedl notes: “While the House budget would raise taxes by $1.265 trillion over five years, and $3.911 trillion over the decade, the Senate tax hikes come to $1.207 trillion and $3.853 trillion, respectively. The Senate’s tax hike of $3,086 per household annually is just below the House’s $3,135 per household tax increase.”
Both resolutions would allow all the 2001 and 2003 tax cuts to expire (or at least require that Congress raise other taxes instead). And neither budget resolution assumes a ‘fix’ for the Alternative Minimum Tax (AMT) after 2009, thus subjecting 20 million more households to that tax. The only real tax policy difference between the House and Senate is that, while both budgets would fix the AMT in 2009, the House would raise taxes by $70 billion elsewhere, while the Senate would not. The Senate option is superior: simply keeping the AMT as is should not require raising other taxes.
Lest any Senator try to avert these coming tax increases, the Senate budget contains a multitude of new rules designed to make sure that they occur. Any Senator offering legislation to extend current tax rates would be ‘violating’ three different Senate budget rules, each of which would require 60 votes to overcome before the Senate would even be allowed to vote on the legislation itself. These obstacles would apply to merely keeping current tax rates in place. By contrast, current entitlement spending formulas, which are forcing entitlement spending up by 6 percent to 7 percent annually, would continue automatically without any restraints.
On spending, the Senate’s non-emergency discretionary spending proposal of $1,010 billion is $18 billion above the President’s request (plus an additional $4 billion in advanced appropriations). This represents a 7.3 percent increase over last year. By raising the discretionary spending baseline for future years, the Senate’s extra $18 billion above the President’s request would cost an extra $216 billion over the decade. And like the House budget, the Senate version fails to propose any entitlement reforms to deal with the impending Social Security, Medicare, and Medicaid costs of 77 million retiring baby boomers.
Finally, like the House version, the Senate budget contains dozens of reserve funds that could used to hike taxes even higher if lawmakers decide to increase spending further. The Senate budget would also allow an additional $35 billion economic stimulus – without any offsets – on top of the stimulus bill already signed into law.