Today marks a very auspicious occasion—the first time since April 29, 2009 that the U.S. Senate will have acted to fulfill its responsibilities under the nation’s law and pass a budget!
Basically, that means that the U.S. government has mostly been on spending autopilot for the last 1,414 days.
Not that their idea of a budget reflects any degree of competence in fiscal discipline. Erik Wasson of The Hill reports that the budget authored by Senator Patty Murray (D-WA) includes $975 billion in very real new tax revenue, but won’t come anywhere close to bringing the budget into balance, since it reverses the sequester budget cuts and substitutes phony ones in its place:
The first budget from Senate Democrats in four years includes nearly $1 trillion in new taxes but would not balance the budget.
The blueprint unveiled by Senate Budget Committee Chairwoman Patty Murray (D-Wash.) on Tuesday to her Democratic colleagues would also turn off the next nine years of the sequester and replace those spending cuts with a 50-50 mix of tax increases and spending cuts….
Murray argues that her budget cuts $1.85 trillion from deficits over 10 years. But once the sequester cuts are turned off, Murray’s budget appears to reduce deficits by about $800 billion, using the Congressional Budget Office’s baseline. The Murray budget does not contain net spending cuts with the sequester turned off.
Taking that $1.85 trillion 10-year deficit reduction figure and subtracting Senator Murray’s $975 billion in new tax revenue from it suggests that there will be $875 billion in spending cuts over the next 10 years.
However, that spending cut figure includes $240 billion from the end of the Afghanistan war, which President Obama has already committed to ending in 2014. In February, the U.S. was spending approximately $5.3 billion per month in Afghanistan, a figure that is falling as U.S. troops progressively leave the country. Even if sustained through an entire year, it would amount to a total of $63.6 billion.
So how does that actual spending cut get multiplied into $240 billion in “savings”? Easy – Senator Murray is ignoring President Obama’s commitment to remove the major U.S. troop presence in that country by the end of 2014 and is assuming that the U.S. would have continued fighting the Afghanistan war at a lower level for the full 10 years covered by her budget, if not for her “spending cut”.
There are other problems with Senator Murray’s assumptions of “savings”, such as the rock-bottom interest rates that she expects the U.S. to benefit from indefinitely for the money it borrows to support its spending, but it’s pretty clear that tax hikes outweigh actual spending cuts by a substantial margin as her deficit reduction device of choice.
You would think that after 3 years and nearly 11 months, the leaders of the U.S. Senate could have come up with a more competent budget.
Update March 14, 2013: It’s worse than we first heard. Ed Morrissey reports the full total of tax hikes is $1.503 trillion.
Meanwhile, the Senate’s budget increases government spending by an average of 4.7% per year in each and every year through the next decade, far faster than the expected rate of inflation. Here, government spending would increase by roughly $2.2 trillion from 2013’s level to reach $5.7 trillion in Fiscal Year 2023.
And that doesn’t include the budget gimmickry of phony spending cuts that we described above.
Even with the Senate budget’s dramatic increase in tax collections, those numbers mean that the nation’s debt burden will not be reduced, as measured by the national debt-to-GDP ratio. That outcome puts the U.S. at greater risk of being exposed to the national debt adverse feedback loop that we recently described, and which we’ll revisit in the very near future.