The No-Surprise Senate Budget: Higher Spending, Higher Taxes, No Real “Balance”
Patrick Louis Knudsen /
After going nearly four years without producing a budget resolution, Senate Democrats today released a plan confirming their mantra about “balanced” approaches has nothing to do with actually balancing the budget.
In their view, “balance” is a mix of higher taxes and higher spending, chronic deficits and debt, and a relentlessly growing federal government. Those who call this a “radically different” vision from that of House Republicans certainly got that one right.
Using the Heritage budget plan, Saving the American Dream, as a benchmark for the fiscal year (FY) 2014 budget, the blueprint presented today by Senate Budget Chairwoman Patty Murray (D–WA) fails on six key criteria.
1. Fails to Balance. Like President Obama, Senate Democrats don’t even try to balance the budget. They speak of “deficit reduction,” not balance. In contrast, the House budget resolution balances within 10 years.
In one sense, the Senate budget proves the folly of trying to reduce deficits with heavy tax increases. Even with a $975 billion tax hike over 10 years—and this on top of the $618 billion tax increase enacted in January and the new Obamacare taxes—revenue never catches up with the budget’s spending, which never falls below 21 percent of gross domestic product (GDP).
As Murray herself noted today, during the budget surplus years of the late 1990s, spending plunged to 18.2 percent of GDP. Senate Democrats have not yet learned that balanced budgets come from spending restraint and a strong economy.
2. Further Guts Defense. Even without the $43 billion sequestration that started March 1, the national defense budget has been squeezed by Obama’s reductions just when U.S. forces need replenishment and modernization. The House budget resolution provides $6.525 trillion defense funding over 10 years, including activities in Iraq and Afghanistan, by holding base spending at the level of the Budget Control Act caps without sequestration. The Senate budget has a total of $5.867 trillion over 10 years—again including overseas operations—which is $658 billion below the House’s figure.
The Senate budget proposal will provide $552 billion in total defense budget authority in FY 2014. This is even less than Obama proposed for FY 2014 in his budget request of last year. Fulfilling U.S. security commitments will require much more funding than the level proposed by the Senate Budget Committee.
3. No Significant Entitlement Reform. Instead of reforming entitlements, the Senate budget insists on “keeping promises” it cannot keep. These promises are fiscally unsustainable under the current entitlement structure, and pretending otherwise is irresponsible.
The Senate budget resolution outlines the same failed anti-poverty policies that liberals have promoted for decades: pouring more taxpayer dollars into the nation’s ever-expanding means-tested welfare system. These welfare programs undermine work and marriage and promote long-term dependence, which generates the need for even more spending in the future. Despite $20 trillion in spending, the poverty rate has remained virtually unchanged since the beginning of the War on Poverty. Nevertheless, the left continues to claim that the solution is to spend more—and so does the Senate budget.
4. Retains Obamacare. Rather than reforming the health-care entitlements, the Senate budget leaves Obamacare fully intact, allowing more than $1.8 trillion in new health care spending. At a time when the nation has more than $11 trillion in publicly held debt and annual trillion-dollar budget deficits, such profligate new entitlement spending on the Medicaid expansion and Obamacare’s costly subsidies is irresponsible and nonsensical. Worse, it leaves seniors and the poor with broken government health programs. To improve access to health care and create health care savings, the existing health-care entitlements must be fundamentally reformed, not ignored.
5. No Serious Reduction in Non-Defense Discretionary Spending. While claiming spending restraint, the Senate budget spends $977 billion more in non-defense discretionary programs than the House budget over 10 years. Indeed, one of the first things the Senate budget does is throw another $100 billion at the kind of infrastructure “stimulus” policies that have failed to stimulate the economy in the past. The budget then brags about its additional “investments” in education, job training, and the like. This is not the language of spending restraint.
The budget’s education “investments” expand Washington’s intervention at all levels. It would expand the federal Head Start program, which has been deemed completely ineffective by the Department of Health and Human Services. Head Start should be eliminated, along with any effort to increase Washington intervention into the early education and care of the youngest Americans.
The budget would also increase spending on programs that fall under No Child Left Behind at a time when states are demanding freedom from federal education programs and red tape.
Over the past four decades, inflation-adjusted federal education spending has nearly tripled. Instead of continuing the education spending spree, which has failed to improve educational outcomes, it is time for long-overdue fiscal austerity at the Department of Education coupled with genuine relief from red tape and federal mandates.
6. Tax Hikes, Not Tax Reform. Murray’s budget includes a massive tax increase. She raises taxes by almost $1 trillion ($975 billion to be exact) over the next 10 years by “closing loopholes.” Closing loopholes is Washington-speak for eliminating deductions, exemptions, and credits.
Which loopholes to close Murray leaves up to the Senate Finance Committee. But she is pursuing this tax increase unnecessarily. The Congressional Budget Office says that revenues will be 19 percent of GDP at the end of the current 10-year budget window. That is uncomfortably above the 18.5 percent of GDP that tax revenues have averaged in times of economic growth since the end of World War II. Murray’s budget would push revenues close to 20 percent of GDP by 2023, well above average—yet still not enough to catch up with her budget’s excessive spending.
The biggest accomplishment for Murray was delivering a budget that will be voted on by the full Senate—or at least promised by Majority Leader Harry Reid (D–NV). It also establishes a meaningful contrast between the vision and robustness of the House Republican plan. On all other counts, the Senate budget misses the mark.
The following Heritage experts also contributed to this blog: Baker Spring (national defense) Nina Owcharenko (health care), Lindsey Burke (education), Rachel Sheffield (anti-poverty spending), and Curtis Dubay (taxes).