WASHINGTON — The Concord Coalition said today that President Bush’s fiscal year 2007
budget takes an appropriately hard line on spending, but its claim to result in
significant deficit reduction relies on budgetary gimmicks that understate
WASHINGTON — The Concord Coalition said today that President Bush’s fiscal year 2007
budget takes an appropriately hard line on spending, but its claim to result in
significant deficit reduction relies on budgetary gimmicks that understate
likely expenses and overstate likely revenue. Moreover, in an ominous sign of
the long-term fiscal pressures beginning to build, the budget shows the deficit
increasing again in 2011.
Concord pointed out that the deficit projections in the
budget assume that costs for military operations in Iraq and Afghanistan will
decline substantially in 2007 and that there will be no further costs after
2007. Furthermore, the estimates assume a growing revenue windfall from the
alternative minimum tax (AMT) after 2007. Neither is a realistic assumption and
neither is consistent with administration policy. The cost of continuing the war
efforts and providing AMT relief would add nearly $500 billion to the deficit
over the next five years and more than $100 billion in 2009 alone.
“The numbers in this budget are
not realistic and the policy proposals fail to make the necessary trade-offs to
put us back on a more fiscally responsible path. The mix of spending and tax
cut proposals in the President’s budget would actually increase the deficit by
more than $400 billion through 2011 —
even without counting the likely costs for military operations and AMT relief.
When the full costs of the President’s policies are included, the deficit will
remain in the vicinity of $300 billion for the rest of the decade,” said Robert
L. Bixby, executive director of The Concord Coalition.
“Beyond then, the combination of
expanding entitlement costs and proposed tax cuts would lead to much higher
deficits — a problem that is hidden
from view in the administration’s five-year budget window. Even if the
President’s budget does manage to cut the deficit in half by 2009, so what? Not
only is this a significant retreat from the bipartisan balanced budget goal that
existed only a few years ago, but focusing undue attention on cutting the
deficit in half by 2009 diverts attention from the more daunting long-term
fiscal challenges signaled by the increase in the deficit after 2010,” Bixby
said.
The revenue loss from the President’s proposals swamps the
savings from entitlement programs. The budget would permanently extend the tax
cuts enacted in 2001 and 2003 for a revenue loss of nearly $120 billion in 2011
alone without identifying any offsets, even though the projected surpluses that
were supposed to finance the tax cuts when they were originally enacted have
long since been replaced by projected deficits. The total revenue loss over five
years is $285 billion. Meanwhile, the proposed entitlement savings come to just
$65 billion.
“Breaking our nation’s addiction to debt will require
Presidential leadership and bipartisan cooperation,” added Concord Coalition
Policy Director Ed Lorenzen. “While the
President’s proposals to address soaring entitlement costs are an encouraging
step, the budget does not signal a willingness to make trade-offs by putting
everything on the table. The President must invest political capital behind
these proposals and demonstrate a willingness to compromise by applying fiscal
discipline to his priorities in order to reach a bipartisan solution to our
long-term fiscal challenges.”
The Concord Coalition is a nonpartisan, grassroots organization
dedicated to balanced federal budgets and generationally responsible fiscal
policy. Concord’s co-chairs are former Senators Warren B. Rudman (R-NH) and Bob
Kerrey (D-NE). Former Commerce Secretary Peter G. Peterson serves as President
of The Concord Coalition.
Chart:
President’s Budget
Paints Unlikely Picture (PDF):
http://www.concordcoalition.org/issues/fedbudget/charts/0602-presbaseline.pdf
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CONTACT:
Tristan Cohen
(703) 894-6222
communications@concordcoalition.org
