Another Big Budget Blow-Out
By Nathan Tabor (05/25/07)
With summer coming, your thoughts may be turning to whether you'll need a second mortgage to afford a drive to the beach - or even to the grocery store.
But, of course, to the spendaholics in Washington, gasoline costs must really seem like chump change—compared to the federal budget.
When surfing the 'Net the other day, this headline from the Associated Press screamed out for attention: "Democrats Agree on $2.9 Trillion Budget." Yes, that is "trillion" with a "t"—and nearly three trillion at that.
It should be said that the Democrats give the old term "new math" new meaning. For, along with their huge budget blueprint, they also announced that there would be a $41 billion budget surplus in five years. Five years is a long time, especially in "Democratic years." It means that your child could graduate from high school and from college before you'd ever see a dime of the surplus.
But wait—I am getting ahead of myself here. For the Democrats don't really intend for you, the average taxpayer, to benefit from that surplus. Because, you see, according to Dem calculations, that surplus five years hence can only occur if some of President Bush's tax cuts are allowed to expire.
That's right—the Democrats in power on Capitol Hill are once again declaring war on tax cuts. Doesn't it make you yearn for the days when Republicans were in control of Congress? Oh, that's right—even some Republicans tend to catch spendaholic fever when they reach Washington.
Under the Democratic blueprint, taxes on income, dividends, and stock sales will rise in 2011—what I would call a blueprint for economic stagnation. There's strong evidence that the tax cuts approved in 2001 and 2003 helped to jumpstart a stalled economy—but Democrats are apparently closing their eyes on the evidence. Why? Because it conflicts with their vision of government being the primary engine of economic growth, rather than business.
Democrats are holding out a ray of hope for the middle class in the form of the possibility of renewing some tax cuts totaling about $180 billion. The pay-as-you-go rule would also be applied—meaning that spending increases in Medicare, children's health care, or farm subsidies would have to be paid for up front so that the deficit won't grow larger. The problem is that the plan does not limit the financing to spending cuts, but also permits tax increases in other parts of the budget to make up for the shortfall.
Senate Budget Committee Chairman Kent Conrad, a Democrat from North Dakota, was quoted by the AP as saying, "We've been placed in a deep hole. This plan will begin to dig us out." But a Republican on the same committee, Judd Gregg of New Hampshire, burst the Democratic bubble by noting that the budget blueprint would yield "the largest tax increase in U.S. history" along with "billions in new spending."
It's clear that, with their latest federal financial plan, the Democrats are gearing up their public relations machine for the 2008 election. The problem is that, quite simply, their numbers do not add up.
And I think the typical taxpayer is finally catching on.
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