- The Washington Times - Thursday, March 15, 2007

The Republican-controlled Congress failed to pass a budget resolution for fiscal 2007. Meanwhile, Republicans approved only two of 12 appropriations bills for a year that will likely add more than $550 billion to the national debt. That fiscal record sets a pretty low bar for this year’s Democrat-controlled Congress to surmount. Judged by the five-year budget resolution crafted by Senate Budget Committee Chairman Kent Conrad, Democrats may have a tough time meeting even that challenge. One big problem is their propensity to follow the bad leads of the White House on the alternative minimum tax (AMT) and defense spending. If this is what passes for bipartisanship, we could use less of it.

Mr. Conrad offered no definitive answer to one of the biggest fiscal questions of the times: Which, if any, of the 2001 and 2003 Bush tax cuts, which are scheduled to expire at the end of 2010, will Democrats permit to be extended, assuming their representation in Congress and/or the White House will give them blocking power? “We now have more than three years to deal with the expiration of these tax policies,” a summary sheet prepared by the Budget Committee’s Democratic staff noted, “and we should use that time wisely.” We agree. There will also be two intervening congressional elections and one presidential election. That will be more than enough time for Americans to hear the partisan arguments and render their judgments. For now, Mr. Conrad intends to reinstate the 1990s-era PAYGO rules, which generally require increases in entitlement programs or reductions in taxes (which include extending the 2001 and 2003 cuts after 2010 and “patching” the AMT) to be “paid for” either by reducing entitlement spending elsewhere or raising other taxes.

The five-year budget blueprint (2008-2012) drafted by Mr. Conrad purports to generate a unified budget surplus of $132 billion in 2012. But his plan offers an AMT “patch” only for income earned in 2007 and 2008, admittedly one year more than the president’s plan. By indexing the AMT for inflation, the patch prevents the AMT-related imposition of higher taxes on middle-class families. The patch costs about $60 billion per year.

In one of his famous charts, Mr. Conrad declares that his “budget resolution fully funds Bush defense request over five years.” He surely knows that poses another problem. The Bush administration’s five-year budget blueprint projects that spending on its war on terror will decline from a low-balled $142 billion in 2008 to $50 billion in 2009 (and nothing thereafter). The Pentagon’s Joint Chiefs of Staff project spending $84 billion in Iraq alone in 2009. So, “fully fund[ing]” the president’s defense spending request doesn’t quite cut it.

In addition to spending more on domestic programs (education, health care, etc.) than the president proposes, Mr. Conrad claims that Congress could significantly reduce the “tax gap.” That’s the $350 billion annual difference between taxes paid and taxes owed. We wish him well in bridging this gap, but we regrettably think he vastly overestimates what he can recover. The “tax gap” may be today’s version of the “waste, fraud and abuse” budget solution of the 1980s, which never materialized. We hope he proves us wrong.

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