House Democrats described the budget they released yesterday as a “clear contrast” to the one introduced by House Budget Committee chairman Paul Ryan (R–WI). It is a clear contrast—but that’s not a compliment.
The proposal, offered by Representative Chris Van Hollen (D–MD), ranking member of the Budget Committee, merely calls for the same tax-and-spend vision for the country that President Obama proposed in February with his budget.
Here is how this budget proposal measures up against key criteria:
Entitlement Reform. Van Hollen rightly says that “health care and retirement programs pose long-term challenges.” Like the President’s budget, however, this one fails to offer specific proposals to put Medicare, Medicaid, and Social Security on a sustainable path. It rejects the transition to a premium-support system contained in the Budget Committee’s proposal and instead embraces the President’s costly health care law, which will truly “end Medicare as we know it” by driving the program into bankruptcy. It does nothing to fix Medicaid. It proposes no solutions to restructure Social Security even though the program began running deficits in 2010 that will continue indefinitely. More stunning is that this budget even denies that the program is in trouble.
National Defense. Over the fiscal years (FY) 2013–2022 time period, this budget would provide about $581 billion less for the total defense budget than the Budget Committee plan. Defense has already taken a hit from the Budget Control Act spending caps. Providing lower funding levels for defense would further undermine our security and troop readiness. This budget addresses the scheduled sequestration for defense (and the rest of the sequestration), but it does so through alleged “targeted” spending cuts and tax increases.
Specifics, of course, are scarce indeed. In a departure from both the Budget Committee and Obama budget, it completely ends funding for troops fighting overseas after 2014. This is a significant omission: Some degree of operations in Iraq and Afghanistan will surely continue after 2014. The levels provided for in this budget would be insufficient for funding the overall defense effort.
Spending Reduction. Echoing President Obama’s budget, this House Democratic plan calls for billions in new or additional spending, including $50 billion more on transportation, $10 billion on a misguided infrastructure bank, and $80 billion on education jobs. Though disguised as “investments,” it is just more deficit spending.
Spending in FY 2013 would total $3.7 trillion, and it would grow to $5.5 trillion by 2022. Under this budget, spending remains above 22.1 percent of GDP throughout the next 10 years, which is above the historical average of about 20.2 percent of GDP.
Tax Reform and No Tax Hikes. This plan would hike taxes by $2.4 trillion over 10 years (compared to the Congressional Budget Office’s current policy baseline) and implement the infamous Buffett Rule, which is fair to no one despite claims to the contrary. Tax revenues top 19.7 percent of GDP within 10 years, well above their historical average level. This budget misses the opportunity to propose fundamental tax reform, such as adopting the New Flat Tax, part of The Heritage Foundation’s Saving the American Dream.
Reaching Balance. Balancing the budget is a means to control runaway spending, which is the main driver of current and future deficits. Just like the President’s budget proposal, this one fails to balance. Deficits fall from $965 billion in 2013 to $451 billion in 2017 but then rise thereafter to $675 billion in 2022. Overall, deficits total $6 trillion over the 10-year period, bearing a grim resemblance to Obama’s $6.4 trillion in accumulated deficits.
Not surprisingly, proponents of this budget tout it as a jobs bill, continuing the fallacy that continued deficit spending will yield increased and sustained economic activity with jobs aplenty. Couching new spending as investment is still a wolf in sheep’s clothing. This budget fails to focus on getting spending under control and fixing the entitlements programs that threaten to devour all tax revenues and drive debt to unsustainable levels.
U.S. credit has been downgraded already, and Congress will likely face another debt limit vote within a year. Congress simply cannot afford to put off the tough choices now.