Politics & Policy

Taxing Budget

When it comes to the Democrats and taxes, it’s important to look at what they do, not what they say. Very few congressional Democrats possess the candor to admit that they are in favor of letting the Bush tax cuts expire, yet for the second year in a row the Democrats have put forward a budget resolution that assumes rates will snap back to their previous levels. This would constitute a $683 billion tax hike over five years.

The Democrats’ budget is just as noticeable for what it leaves out. There is no attempt to address the looming entitlement crisis, as Medicare and Social Security obligations balloon in response to the retirement of the first baby boomers. There is no solution to the problem of earmarks, which allow members of Congress to direct funds to pet projects with little transparency or accountability. And there is no long-term fix to protect the middle class from the Alternative Minimum Tax, a tax designed to keep the rich from claiming too many deductions but which now sneaks up on a growing number of families with average incomes because it was never indexed for inflation.

Both House and Senate Democrats put forward budget resolutions that call for a one-year AMT “patch” that would shield middle-class households and save taxpayers approximately $62 billion. But neither budget would offset the forgone revenue by cutting spending. The House budget calls for $70 billion in new taxes on investors, whereas the Senate budget would simply add $62 billion to the deficit.

Not that there isn’t spending to be cut. Dozens of government programs have outlived their usefulness, failed to demonstrate any positive results, or were mistakenly conceived in the first place and ought to be shuttered. But rather than engage in a long-overdue budget-cutting, House Democrats added $22 billion in domestic spending above the administration’s request. (Their Senate confederates would add $18 billion).

President Bush has threatened to veto any appropriations bill that pushes domestic spending over the top-line number he set in his budget request. He made the same promise last year and held to it, vetoing two bloated spending bills and forcing the Democrats to keep non-emergency spending at the level he requested. The president’s victory was not complete, however, as the Democrats were able to sneak $11 billion in additional domestic spending into “emergency” legislation such as the millions of dollars for California spinach farmers that Nancy Pelosi slipped into the Iraq-war appropriations.

Look for the Democrats to try the same thing this year. The war supplementals will be unpopular with both parties. Republicans and conservative Democrats will resist the timetables for withdrawal that Pelosi and Harry Reid will inevitably attempt to incorporate into the bill, whereas white-flag Democrats will not want to authorize another dime for the war under any conditions. The Democratic leadership will try to buy votes from these recalcitrant constituencies by adding unrelated spending to the supplementals.

Conservatives’ key objective in this fight will be making sure our military commanders have everything they need to prosecute the war successfully, but a secondary objective should be to keep the Democrats from using our troops as pack mules for pork projects.

These are the short-term concerns. The long-term concern, for the second year in a row, is that the Democrats have put forward a budget that assumes the expiration of the Bush tax cuts will generate more than two-thirds of $1 trillion in additional revenue to pay for their spending sprees. It is important for conservatives to emphasize this loudly and clearly. One party’s nominee for president supports making the Bush tax cuts permanent. The other party, from Congress to the campaign trail, will make no such commitment to staving off what would be the largest tax increase in American history.

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