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April 16, 2007
Ted Boettner
Turning around spending priorities: Congressional budgets show renewed
commitment to families
Each year, Congress approves a budget that is an explicit expression of the
country’s priorities. Recently, the U.S. House of Representatives and Senate
both passed budget resolutions that spend more on human needs programs, allow
President Bush’s tax cuts for the wealthy to expire after 2010, and institute a
pay-as-you-go rule requiring that new social spending or tax cuts would need to
be “deficit neutral,” that is, paid for by tax increases or spending cuts.
Both the House and Senate budgets reflect a departure from the Bush
administration’s priority of tax cuts and government expansion programs financed
by additional borrowing that increased the deficit by $1.4 trillion from 2001 to
2006. The new congressional budgets also reflect a renewed commitment to helping
low and moderate-income families with food stamps, children’s health care and
other programs serving people and communities in need. The house budget also
increases funding for education, housing, the environment, food stamps and
health care.
While these renewed spending priorities still place the United States almost
last in welfare expenditures among industrialized nations, they are a small step
in turning around the nation’s spending priorities. Despite these somewhat
positive developments, Rep. Shelley Moore Capito was the only member of West
Virginia’s congressional delegation to vote against the budget resolution.
Capito voted against the resolution claiming that it represented the “largest
tax increase in American history,” costing taxpayers over “$400 billion.”
In fact, the house budget resolution does not raise taxes by a penny but does
assume that the regressive Bush tax cuts of 2001 and 2003 (which expire in 2010)
will not be extended, allowing the federal government to collect an addition
$400 billion over the next five years. Under pay-as-you-go rules, to balance the
budget and extend the tax cuts past 2010, Capito and Congress would have to
decrease spending or increase revenue. This would mean no more deficits to pay
for tax cuts, something that’s been very popular over the last six years in
Congress.
Of course, Capito has always known that the tax cuts would expire at the end
of 2010 and that the higher, pre-2001 tax rates would return because the
Republican-controlled Congress wrote the legislation. If the $400 billion
derived from letting the tax cuts expire amounts to the largest tax increase in
history, then she bears responsibility for it. In the years since the law was
enacted, when the Republicans controlled both the White House and Congress, they
never sought to prevent that increase from occurring by extending the current
law. Now, a few years from the tax cuts’ expiration, Capito is trying to act as
though the tax cuts are already permanent and any proposal to offset the costs
of extending them is a “tax increase.” To extend the tax cuts without paying for
them — and to vote against a resolution that would require that any extension of
the tax cuts be paid for — is fiscally irresponsible and only burdens future
generations with massive debt. According to testimony given before Congress last
month, to make the tax cuts permanent will cost a total of $5 trillion from 2011
through 2020. That’s a lot of money to put on the nation’s credit card or take
out of education and other social service programs.
In addition, Capito’s argument that we’re facing the “biggest tax increase in
history” is easily dismantled by the historical record. According to economist
Robert McIntyre, the Bush tax cuts are equal to about 1.79 percent of the U.S.
gross domestic product. McIntrye notes that during the Vietnam War, taxes
increased by about 2.1 percent of GDP; during the Korean War, taxes increased by
4.6 percent of GDP; and during World War II, taxes increased by 14.8 percent of
GDP. It’s also important to recognize that the total spending for the Iraq war
alone will reach $456 billion by the end of fiscal year 2007. A recent study by
Joseph Stiglitz, who is an economics Nobel Prize winner and teaches at Columbia
University, and Linda Bilmes, who teaches at Harvard, showed that total future
costs for the Iraq war could exceed $2 trillion, largely because of expensive
long-term costs for veteran health care. This is a high price tag for a war of
choice.
There is much room for improvement in the House budget, which proposes a $12
billion increase to education, housing, the environment, food stamps and health
care. The plan offers an important down payment on meeting the needs and values
of working-class Americans, but it does not come close to meeting America’s
urgent needs. The evidence of America’s losses in recent years is staggering:
150,000 fewer housing vouchers, 150,000 fewer children receiving child care
help, far less funding for job training and strengthening communities, broken
promises in education, not enough help for our most vulnerable people and much
more. The budget should mirror the shared values of Americans — that each of us
deserves the opportunity to succeed, to have access to adequate health care,
food, housing and education, and the economic security to live with dignity.
It is vital that the final budget resolution have the highest possible figure
for domestic needs. It is imperative that Congress work to ensure that the
fiscal challenges that have been left by the Bush administration and the
previous Congress do not continue for another fiscal year. It is time for the
budget to express a practical commitment to build a nation in which every
American, young and old alike, is free from hunger, is adequately housed and has
access to health care.
Boettner is a research and policy analyst at Mountain State Education &
Research Foundation.
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