Democrats want more spending on popular programs and tax cuts for the poor. Republicans want tax cuts for the poor, the wealthy, and on capital gains. Once again, spring training has begun for those charged with hashing out the federal budget.
Both budget proposals would continue to produce federal deficits for at least the next two to three years. A Republican plan to keep Bush tax cuts after 2010, would produce deficits years after that.
But a needed dose of reality is missing from both plans. The budget watchdog, non-partisan Concord Coalition says both parties are basing budget estimates on unrealistic assumptions.
Democratic leaders in the House and Senate have proposed spending that is $210 billion to $276 billion more than the president has proposed. But the Concord Coalition says the president’s budget is not a good comparison to congressional plans because the president’s budget freezes non-defense discretionary spending for five years, something that has never been done. The group also notes the president’s budget would put non-defense discretionary spending at 2.8 percent of GDP, an all time low, and 25 percent below the figure of 2007.
The Democratic budget is not much more realistic. Budget estimates in the Senate and House show discretionary spending increasing 1.5 to 2.1 percent per year, a figure below the level of inflation. The president’s budget shows huge cuts in domestic programs such as Medicare, something also viewed as not very realistic. Both the president and Democratic leaders in Congress show war spending to be stagnant for a couple years at $70 billion and then, magically, disappear.
Military spending in both plans calls for increases of 1.5 percent per year, again below inflation and far below levels of increase in recent past.
Unfortunately, this lack of reality will continue to exist through the election, given that both parties have no penchant for making the necessary tough budget choices in a year when both are vying for the big election prize of The White House.
Unfortunately, government spending on everything from elderly health programs to military pay doesn’t wait for election results. The bills have to be paid. On Wednesday, the Treasury Department reported the federal deficit increased to $263 billion for the first five months of the year and was up 60 percent compared to the same time last year. That is the highest it has ever been just five months into the year.
There are actions Congress can and should take this year, before the election.
It must get serious about strictly enforcing Paygo rules it implemented last year, making sure it reduces spending or raises revenue to make up for new spending. It must get serious about creating a budget resolution that is binding. This is done in many states and takes some of the politics out of budget setting. Leaders agree ahead of time on the level of spending and are required to stick to it.
Few dispute the growing financial dilemma the U.S. faces with the aging baby boom and the spending that will be required to even maintain current levels of service. Yet, few, especially in Congress, are willing to face that reality and do something about it.