Here’s today’s news from the Congressional Budget Office on the recently passed Waxman-Markey legislation: It’s a big tax and spend bill. For the years 2010-2019 the tax increase is $872.8 billion. Ka-ching! (For the record, that’s pretty close [we’re talking government work here] to the $885 billion revenue estimate that Heritage calculated through 2019.)
The CBO estimates the spending increases in the bill add up to $863.8 billion. Wow! It didn’t take long to spend that money. The outlays amount to 98.9 percent of the expected revenue. More startling, perhaps, is that the bill authorizes expenditures of $875.2 billion. That is, they have authorized spending 100.3 percent of the amount taken in. Some of that spending is delayed, perhaps, so that there is no increase in the deficit up to 2019 from Waxman-Markey, but maybe later.
On the other hand, maybe we won’t have to wait for the deficit. Here’s one quote from today’s letter to Henry Waxman: “CBO has not completed an estimate of the bill’s estimated impact on discretionary spending.”
Also, since this most recent scoring seems based on their previous analysis of the legislation, it doesn’t include the impact on government spending from the weaker economy that Waxman-Markey will deliver. Here’s what they said in their previous analysis:
“The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap. The reduction in GDP would also include indirect general equilibrium effects, such as changes in the labor supply resulting from reductions in real wages and potential reductions in the productivity of capital and labor.”
In other words, the CBO is ignoring the trillions of dollars of income that Waxman-Markey destroys. That doesn’t help the deficit.
The Heritage analysis of the Waxman-Markey bill does take into account how a weaker economy affects government revenue, and we find the year over year increase in federal budget deficits amount to $938 billion more debt our nation will owe in 2019. (As with the CBO estimates, this projection is not adjusted for inflation.)
At the very least, we agree with the CBO that the Waxman-Markey legislation is a huge tax and spend bill.