- The Washington Times - Wednesday, March 8, 2006

After reviewing President Bush’s 2007 budget, the Congressional Budget Office (CBO) issued its preliminary analysis on Friday and concluded that cumulative unified budget deficits for the 2007-16 period would exceed $2.1 trillion if all the president’s fiscal proposals were adopted. However, the president’s budget failed to include several costly policies, so the CBO could not assess them. As a result, the cumulative deficit of $2.1 trillion is much lower than it otherwise would be.

Specifically, by requesting only $50 billion in budget authority for military operations in Iraq and Afghanistan in 2007 and nothing thereafter, the budget failed to provide reasonable cost projections. Meanwhile, the president’s budget doesn’t include any relief beyond 2006 from the Alternative Minimum Tax (AMT), which threatens to ensnare tens of millions of families next year and many, many more families thereafter. If the president’s tax cuts are extended, the CBO has estimated that AMT relief over 10 years would cost more than $900 billion.

The CBO estimates the administration’s Medicare proposals would shave $138 billion over 10 years from the program. As a result, net mandatory outlays would average $527 billion per year instead of the baseline (i.e., current-law) average of $541 billion. (Medicare’s net mandatory outlays were $295 billion in 2005; after the “cuts,” they will total $740 billion in 2016.) These are the “Medicare cuts” that are causing concern all over Capitol Hill.

By law, the CBO’s baseline deficit projections incorporate the assumption that current laws and policies remain unchanged. That means tax breaks enacted in 2001 and 2003 (including the child-tax credit and marriage-penalty tax relief) and set to expire in 2008 and 2010 would, by the CBO’s calculations, increase the baseline deficits by $1.55 trillion for the 2007-16 period.

There are numerous laudable spending-discipline proposals that Congress almost certainly will never approve. The budget, for example, proposes to effectively freeze non-defense discretionary nominal spending over the next five years. Also, based on how narrowly Congress recently passed the relatively small adjustments in the rising spending levels for Medicare, the president’s proposal for additional modest adjustments in that program will likely go nowhere on the Hill.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide