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A Tale of Two Budgets


Both houses of Congress have now passed a budget. The Senate has approved the Democrats’ blueprint for federal spending while the House has adopted the Republicans’. Neither document is perfect, but they do offer some telling contrasts.

After four years of failing to produce a budget, the Senate Democrats have united around a plan that raises taxes by nearly $1 trillion. The spending cuts are vague rather than specific—$240 billion from “responsible savings across domestic spending,” $275 billion saved from Medicare by “further realigning incentives throughout the system, cutting waste and fraud, and seeking greater engagement across the health care system,” assumed savings on interest payments.

Worse, even these theoretical cuts are offset by some $100 billion in new stimulus spending plus another $960 billion to replace the automatic across-the-board federal spending cuts known as sequestration. Deficit reduction is only achieved by “closing loopholes and eliminating wasteful spending in the tax code,” but there are no real details here either.

Unlike their counterparts in the upper chamber, House Republicans have approved a budget that attempts to address the long-term financial problems facing Medicare. It balances the budget within ten years without raising taxes, though it does leave intact some past tax hikes. It repeals Obamacare, the biggest new entitlement of the past four years.

This budget has its flaws too. The Medicare reforms come too slow, since seniors have the option of avoiding premium support, and the Medicaid reforms are probably too fast. Social Security isn’t meaningfully addressed at all. The spending discipline starts to dissipate around 2016.

House Budget Committee Chairman Paul Ryan boasts that the federal government will spend $41 trillion over the next decade under his plan, as opposed to $46 trillion under current law. An even bigger problem is that because the GOP budget abolishes few programs, the big spending could be restored by subsequent Congresses.

Look at what happened when Ronald Reagan and Newt Gingrich tried to cut spending in the 1980s and ‘90s, respectively. Their early big cuts were ultimately reversed and many of their fiscal good deeds were ultimately undone.

The Ryan Republicans are also vague on some of their tax reform details, possibly out of fear that revenue-neutrality would boost the average tax rates of some middle-class taxpayers to pay for the tax cuts elsewhere in the budget.

But here is biggest advantage Ryan and the Republicans have over Senate Budget Committee Chairwoman Patty Murray and the Democrats. The Republicans openly work to keep our tax burden in line with its post-World War II norms, keeping spending in line with what would make that sustainable.

Senate Democrats admit that raising taxes is a necessary part of their budget plans. But they continue to pretend that entitlements can be made sustainable with only minor technocratic fixes and that middle-class Americans will not be asked to pay more to keep an expansive vision of the welfare state going.

At some point, either middle-class taxes will have to go up or spending on programs that benefit that middle class will have to go down, at least in relative terms. Ryan’s Republicans acknowledge this, albeit uncomfortably. Murray’s Democrats do not.

We have reached a point where real fiscal discipline cannot be achieved through targeting “waste, fraud, and abuse” alone. This is not just a matter of people flying on corporate jets or being part of the wealthiest 2 percent.

Lasting structural reforms producing real savings are required. The alternative is large budget deficits, a growing debt, and entitlement programs with unfunded liabilities that dwarf our entire economy at the precise moment retiring Baby Boomers will need them.

The longer we wait, the tougher it will be. Gradual, intelligent reforms will be replaced with the meat-axe approach to saving Social Security and Medicare, aping the hated sequester. Our economy that is sputtering along at a 2 percent growth rate will be buffeted by job-killing tax increases.

“To appear to be unable to choose is to appear to be unable to govern,” observed the British Conservative politician Nigel Lawson. Budgets that fail to make tough choices represent a form of misgovernment.

W. James Antle III is editor of the Daily Caller News Foundation and author of Devouring Freedom: Can Big Government Ever Be Stopped?



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