The other budget plans

The House and Senate budget committees released their fiscal 2009-2013 budget blueprints last week, and both are filled with questionable revenue and spending assumptions. Moreover, between the end of fiscal 2007, which was the last budget year over which Republicans technically exercised legislative- and executive-branch control, and the end of fiscal 2013, the national debt will increase by more than $2.5 trillion, according to the budget plan that passed the House Budget Committee on a party-line vote last week.

Unlike the president’s latest budget plan, which provided for Social Security private accounts beginning in 2013 and initiated the Medicare-reform process by calling for $178 billion in Medicare budget savings for the 2009-2013 period (and $556 billion in savings over the 2009-2018 period), the House and Senate blueprints effectively do nothing to begin addressing the long-term budget shortfalls for Medicare, Medicaid and Social Security. According to the 2007 Financial Report of the United States Government, which cited the 2007 Social Security and Medicare trustees’ reports: “From the government-wide perspective, the present value of the total resources needed [over the next 75 years] for the Social Security and Medicare programs equals $40,848 billion — in addition to payroll taxes, benefit taxes and premium payments from the public.” The House plan actually set aside the comically minuscule sum of $750 million over five years to fund Medicare reform. Democrats on the Senate Budget Committee rejected a proposal by Judd Gregg, the ranking Republican, to generate a net savings of $30 billion over five years (or 0.5 percent) for total mandatory entitlement spending.

Like the Bush budget, which Democrats vehemently criticized, both the House and Senate Democratic plans (1) allocate only $70 billion for the wars in Iraq and Afghanistan in 2009 and not a penny thereafter and (2) assume that hundreds of billions of dollars will be raised by the alternative minimum tax (AMT) on income earned during the 2009-2013 period by tens of millions of middle- and upper-middle-class households.

Meanwhile, voters and businesses should keep this in mind: The present value of the de facto unfunded liabilities for the unreformed Medicare, Medicaid and Social Security programs will continue to increase by trillions of dollars each year.