The House just passed a $2.7 trillion budget resolution hours ago, and in what has become an annual charade, at the same time included a boost in the debt limit to $9.6 trillion, saving the members the ignominy of a separate vote on the issue just before the midterm elections. The vote was 218-210. The plan "assumes a federal deficit of $348 billion in fiscal 2007," but this feat is achieved by including the Social Security surplus to hide the real consequences of Congress' and the Bush Administration's policies. The resolution leaves room for $226 billion in tax cuts over the next 5 years while cutting education and veterans' health care spending begining in 2008.
Although Speaker Dennis Hastert claimed that "With today's vote, House Republicans live up to our mandate with a budget resolution that maintains our national priorities of homeland and national security, while still using fiscal restraint," the reality is closer to the comments of John Spratt of South Carolina: "The budget resolution presents no plan and no prospect of ever balancing the budget."
Why? A post at one of my favorite economists' sites, Angry Bear, has a nifty graph and simple, easy-to-understand explanation showing that without the Bush tax cuts, the Iraq War and other increases in defense spending plus the Medicare Part D fiasco, we would have a large surplus. By all means click through, but here's crux of the explanation:
If none of these deliberate changes to taxes and spending had happened – in other words, if tax laws had remained the same as they were in Clinton’s last year in office, discretionary spending had simply grown at the rate of inflation, Iraq had not been invaded, and entitlement programs had remained unchanged by new legislation – then the federal budget balance would have followed the top-most blue line instead of the bottom-most red line. Rather than a budget deficit of $494bn in 2005, the federal government would have run a surplus of $18bn. Rather than facing a future of massive and growing deficits as far as the eye can see, the US would be enjoying the prospect of being able pay down some of its national debt in preparation for the looming retirement costs of the baby boomers.
Not so different from Gore's "Saturday Night Live" skit, is it?