FY2008 Budget Resolution

The confidence with which the majority of the U. S. Senate passed its Fiscal Year 2008 budget resolution corresponds directly with the level of ignorance as to the hard facts of revenue, spending reduction and tax relief that we’ve seen over the past four or five years.  Without a wake-up call in Conference committee debate, this “success” will result in abject fiscal failure for the federal government and for American families.

As a member of the Senate Budget Committee, I was dismayed to see the destruction of years of work—work that created five consecutive years of economic growth and more than seven million new jobs, increased federal revenues by nearly $300 billion over non-partisan estimates by both the Administration and Congress, and will result in a projected budget deficit this year equal to 1.6 percent of Gross Domestic Product as compared to 3.6 percent in 2004.  The reality of spending increases will inspire significant and severe economic burdens down the road.  This budget is not good for Idaho or America. 

The FY 2008 Senate Budget Resolution authorizes a massive tax increase to cover $150 billion in new spending and $2.2 trillion in new debt over the next five years.  Tax increases include no long-term fix for the Alternative Minimum Tax (AMT).  The Congressional Budget Office estimates that it will soon be less expensive to repeal the regular income tax than the AMT.  In three short years, tax rates on investments (mutual funds, maybe even 529 college savings plans) that middle class families have made will skyrocket--not good news when tax time approaches, not to mention an utter disincentive to invest hard-earned money.  Come tax season in four years, a family of four earning $50,000 will experience a 132% tax increase--a liability of over $3,600.  Low-income taxpayers will pay 33 percent more, the child tax credit will be cut in half, married couples will be penalized and 15 million senior citizens will see taxes increase.  All of this, incidentally, will coincide with fiscally unmanageable entitlement programs:  The budget resolution contains no mechanism whatsoever to control entitlement (Medicare, Medicaid, Social Security) spending.  When we face the reality that in ten years entitlement spending will consume nearly 70 percent of the federal budget, ignoring it today is nothing short of astonishing. 

When you look beyond the next ten years, the fiscal picture worsens.  Government estimates show that we promise our children and grandchildren $32 trillion in Medicare spending over the next 75 years with no payment mechanism.  In his budget request, the President proposed a modest $70 billion reduction in the growth of Medicare.  This modest reduction, which would only affect the wealthiest five percent of beneficiaries, would actually remove $8 trillion of this $32 trillion unfunded liability.  Unfortunately, Senate leadership chose not to include provisions that would even pay off one dollar now of this astronomical future debt.  One might call this the “Wimpy approach.”  Fans of Popeye know that his friend, Wimpy, goes through life saying “I will gladly pay you Tuesday for a hamburger today.”  Unfortunately, this Congress has chosen to continue eating hamburgers today, while leaving a $32 trillion (that’s one thousand billion 32 times) tab to be picked up by future generations on future Tuesdays.

I’m reminded of something Laurence J. Peter, author and educator, once observed:  “Against logic there is no armor like ignorance.”  Congress arms itself with ignorance at our nation’s financial peril. 

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