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Binder Full of Gimmicks

Budget offered by Democrats includes $1.5 trillion in new taxes, GOP says

Patty Murray / AP
March 14, 2013

The top Republican on the Budget Committee said Thursday that the Senate Democratic budget proposal is based on accounting gimmicks, double-counts spending cuts, and raises taxes by hundreds of billions of dollars more than advertised.

Republicans claim an accurate accounting of the budget proposal shows that it achieves all of its deficit reduction through tax hikes and in fact increases spending rather than cuts it.

Democrats say the budget resolution unveiled yesterday by Sen. Patty Murray (D., Wash.), who chairs the Budget Committee, trims the deficit by $1.85 trillion over ten years through spending cuts and tax hikes.

Sen. Jeff Sessions (R., Ala.), the committee’s ranking member, claims that the measure’s proponents are misrepresenting both the spending and revenue sides of the equation.

On the spending side, the budget assumes in its baseline that cuts mandated by the sequester  that went into effect this month will be repealed, but fails to account for the resulting $1.1 trillion increase in federal outlays.

Murray’s budget actually contains a net spending increase after that is taken into account, even though Democrats claim the proposal will reduce spending by $975 billion over ten years.

Sessions sparred with John Righter, the committee’s deputy staff director, during a Thursday markup of the budget resolution over its treatment of sequester cuts. Sessions claimed that using the sequestration-free baseline amounts to "double-counting."

Righter defended the budget’s assumptions, saying it is "likely that [the sequester law] will be changed," but Sessions said that amounted to substituting political analysis for economic analysis.

"You're taking the political view as somehow this is going to be turned off and there's going to be changes and therefore you don't have to account for the increased spending of $1.1 trillion," Sessions said.

Righter insisted that Murray’s budget uses a similar baseline to the proposal offered by House Budget Committee chairman Paul Ryan (R., Wis.).

However, Ryan made a point of excluding from his budget supposed savings on previously planned troop drawdowns in Iraq and Afghanistan, interest payments on debt made unnecessary by sequester cuts, and reductions in disaster relief spending authorized in the wake of Hurricane Sandy.

Ryan has said his proposal cuts spending by $4.6 trillion over ten years. If he had included savings from troop withdrawals and reduced spending on disaster relief and interest payments, he could claim $5.7 trillion in spending cuts.

Ryan has previously criticized such budgetary gimmicks as "moon yogurt accounting."

Murray included Overseas Contingency Operation (OCO) spending in her budget’s baseline then eliminated that spending, allowing Democrats to claim an additional $240 billion in savings for operations that are already scheduled to be drawn down.

She also included spending on Sandy relief in the baseline, even though that spending will not be a part of the federal budget in future years. The Murray budget then counts a reduction in Sandy-related outlays towards its overall reduction in spending.

Gordon Gray, the director of fiscal policy at the American Action Forum and a former Senate Budget Committee staffer, said Murray is attempting to "muddy how her policies will ultimately affect spending."

Taking into account policies that specify a reduction in OCO and disaster relief spending, Gray explained, "her policy adjustment is a net wash" because it "saves" money that was not realistically going to be spent in the first place.

After subtracting "phony war savings and inflated disaster spending," Budget Committee Republicans say, "the Democrat budget increases spending $645 billion above projected spending levels."

It also hikes taxes by hundreds of billions more than Murray and other Democrats claim, Republicans say.

Murray claims $975 billion in "new revenues," but Republicans say the actual budget document released by the committee contains more than $1.5 trillion in tax hikes.

"They are actually hiding an additional $500 billion in tax proposals buried in their 113 page budget document," one Republican Budget Committee staffer said.

Eli Zupnick, a spokesman for Budget Committee Democrats, said Republicans’ calculations on this point were "false." Zupnick said, the budget calls for "$975 billion in new revenue" and "not a penny more."

Senate Republicans seized on the $1.5 trillion figure.

"Any senator who votes for that budget is voting for a $1.5 trillion tax hike, the largest in the history of our country," said Senate Minority Leader Mitch McConnell in a Thursday speech on the Senate floor.

"The Senate Democrat budget is more than just disappointing: It’s extreme," McConnell added. "It’s really one of the most extreme, most left-wing budgets of the modern era."

The budget is expected to expose divides in the Democratic caucus. Senate Democrats’ electoral arm has signaled that Murray’s budget could be a liability for the party’s vulnerable senators, though one red state Democrat up for reelection in 2014, Louisiana Sen. Mary Landrieu, has already signaled that she will support the measure.

One of Murray’s proposed tax hikes is an effort to reduce the adverse budgetary impact of sequester repeal, which is factored into Murray’s baseline.

The budget assumes a repeal of sequester cuts but proposes an additional $480 billion in taxes to make up for some of the measure’s deficit reduction. The budget also calls for $100 billion in new taxes to pay for additional stimulus spending.

Taken with the advertised $923 billion increase in revenues, the result is $1.503 trillion in total new tax hikes. Because the budget does not actually reduce spending below current law, all of its deficit reduction appears to come on the revenue side.