Worse Than No Budget
THE BUDGET blueprint for fiscal 2006 could come to the House and Senate floors this week. In theory, that could be a good thing: A budget resolution gives lawmakers instructions for how much to spend and how much to cut; without such an agreement, which eluded lawmakers last year, the process is more cumbersome. In practice, though, as this year's budget resolution has evolved, Congress -- and the country -- would be better off without one. Negotiators were trying to resolve the final details last night, but if the whole thing falls apart, that's fine with us.
The resolution would take from the poor and give to the rich. It would provide for easy passage -- no Senate filibuster allowed -- of what's likely to be $70 billion in tax cuts over the next five years, the benefits of which would tilt heavily toward wealthier Americans. This is not a huge sum, but it comes on top of $1.9 trillion in tax cuts since 2001, at a time when federal revenue as a share of the economy is at its lowest level in four decades. The new cuts would, among other things, extend the lower tax rates for dividend and capital gains income. According to an analysis by the Urban Institute-Brookings Institution Tax Policy Center, almost three-fourths of the benefits from those cuts would go to the richest 3 percent of Americans, households making more than $200,000 a year. The deficit over the next five years would grow by over $125 billion more than if no policy changes were put in place.
For the first time since 1997, lawmakers are mandating cuts in entitlement spending, programs that grow automatically (sometimes astronomically) and account for more than half of federal spending. Reining in entitlements is critical, and it isn't going to be accomplished painlessly for any beneficiaries. But Congress should inflict the pain first on those who can tolerate it best, not least.
Instead, and not surprisingly, it seems to be starting with the most vulnerable, while sparing those with the resources (and lobbyists) to squawk. With some farm-state lawmakers resisting the administration's reasonable and modest proposals to trim subsidies, for example, the budget resolution appears likely to take far less from farmers and perhaps more from food stamp recipients. This unattractive trade-off occurs because both fall under the jurisdiction of the agriculture committees. Businesses are resisting an administration proposal to raise the insurance premiums they pay into the struggling Pension Benefit Guaranty Corp. Other companies are complaining about the administration's plan to comply with World Trade Organization rulings and stop U.S. firms that bring anti-dumping claims from pocketing the resulting duties, which should go to the Treasury. Meanwhile, lawmakers are looking at cuts in programs such as Medicaid and Supplemental Security Income, which help the elderly poor and those with disabilities.
Spending discipline is needed, but this budget resolution is a wrongheaded way to achieve it.