Getting nothing but static from Channel DNC

posted at 11:10 am on March 5, 2008 by Ed Morrissey
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Democrats unveiled their new spending plan for FY2009, and as expected, they have added billions and billions to a federal budget already straining at the seams. The new budget pushes DC farther into the red, but Democrats claim it will produce a surplus in four years. How? By soaking taxpayers for the difference:

Senate Democrats unveiled a budget plan yesterday that would inject billions of additional dollars into such domestic priorities as education, energy and transportation, while providing $35 billion for a second round of government spending aimed at stimulating a weak economy.

The spending would push the federal deficit to more than $350 billion in fiscal 2009, but Senate Budget Committee Chairman Kent Conrad (D-N.D.) said the blueprint would erase the deficit within four years, producing a $160 billion surplus in 2013.

To get there, however, Democrats assume all of President Bush’s first-term tax cuts would expire on schedule in 2010, bringing in billions in revenue. But if the most popular tax measures were extended, as the two Democratic presidential candidates have promised, the surplus would all but evaporate, Conrad said.

The Democratic budget also would omit several costly items, including tens of billions of dollars to pay for the wars in Iraq and Afghanistan. Like the budget proposed last month by the White House, the Democratic blueprint includes just $70 billion for the fighting in 2009 and nothing thereafter.

Ahem. Let’s see if we have this straight. While Democrats running for President offer tax cuts to the “middle class”, their counterparts in Congress assume that they won’t get put into place while crafting the next budget. That certainly sends a mixed message, somewhat along the lines of Barack Obama’s NAFTA Dance. Congressional Democratic leadership has prepared a budget that won’t work with either the Republican or Democratic nominees.

Also, the revenue assumptions once again come from a static analysis of the Bush tax-cut expirations. It assumes that the revenue stream remains static, that is, that tax policy does not affect the market which produces the incomes on which taxes derive. But we know that to be false; tax policy does impact markets, which impacts incomes and therefore tax revenue. As the government takes more capital out of the market, less remains to generate new business and expansion of existing business, which then shrinks demand for labor. That shrinks demand for goods, and the market return from higher tax rates actually produces less revenue.

That means the underlying assumptions of this budget are entirely false — and that’s before we get to the notion that the war will end in 2009. The expiration of the tax cuts will not produce the revenue that Dorgan and his cohorts assume for the purpose of the budgeting here. The predicted surplus will never arrive, but instead the taxes will put enough of a burden on the economy to push it into recession. That will require even more “stimulus” spending, which means greater federal deficits and more taxation from the “rich” to cover the gap.

George Bush has threatened a veto, but Democrats believe he is bluffing. They claim that the difference between Bush’s budget and their own is only $18 billion. Interestingly, that’s about the same amount of pork that the 110th Congress stuffed into the last budget, and I suspect this one may have even more. If the Democrats want to spend an extra $18 billion, why not cut all of the pork out of this year’s budget to fund it? If they’re not willing to do that, then maybe they can explain why they need to increase our tax burden as their other option.

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