Senate Budget Committee chairman Kent Conrad has released his budget plan for the next five years. The following are some thoughts on the proposal:
- Conrad proposes total federal spending for FY2011 equal to 25 percent of GDP, which would match the current fiscal year’s post‐war record.
- Conrad says his proposal will cut spending as a share of the economy by 11 percent. This sounds okay until you realize that out‐year spending would still be substantially above the norm at 22 percent of GDP.
- Conrad says his plan will cut the deficit as a share of the economy by 70 percent. But he’s starting from a Mount Everest‐sized deficit of $1.4 trillion this year. Besides, his projected deficits for the next five years would add another $3.9 trillion to the debt.
- Conrad gets to his lower future deficits through tax increases. In addition to marginal tax rate increases on singles earning over $200,000 ($250,000 for couples), the alternative minimum tax would increase starting in 2012, and estate taxes in 2011. Conrad says “lawmakers will have to find revenues elsewhere in the budget” to provide AMT and estate tax relief in future years. Assuming Congress doesn’t suddenly find the gumption to offset the tax relief with spending cuts, more debt or tax increases elsewhere will be its solution.
- Conrad includes Obama’s proposal to freeze non‐security discretionary funding for three years. Unfortunately, this segment of spending only amounts to 13 percent of the budget. As Chris Edwards has pointed out, actual spending will be higher as previously authorized stimulus spending sloshes forward.
- Conrad supports throwing more taxpayer money down the drain for failed federal experiments like education and Head Start.
- Conrad’s proposal includes a $2 billion reconciliation instruction, which could be a vehicle for getting more big government with 50 Senate votes. Last year’s budget resolution also contained a $2 billion reconciliation instruction that was used to facilitate passage of the gargantuan health care bill.
- With regard to the nation’s long‐term fiscal woes, Conrad punts the ball to the president’s National Commission on Fiscal Responsibility and Reform. But this commission might be just a stalking horse for huge tax increases, which aren’t “responsible” and isn’t “reform.”
In sum, there’s not much difference between Conrad’s proposal and the President’s. Both would continue the massive spending, deficits, and debt that are bankrupting the country.