The Democrats' criticism of the Bush budget falls into two areas: 1) It does not spend anywhere near enough on important national domestic needs, and 2) the tax cuts have severely reduced needed revenues to pay for them.
For those who think government spends too much, Bush's $2.9 trillion budget will be seen as a bargain if the Democrats' future spending plans are adopted. Former North Carolina senator John Edwards says if he wins the Democratic nomination and the presidency, he will propose a universal-health-care plan that will cost $120 billion, a figure that budget-crunchers say is deeply underestimated. And that's only one of many big spending plans he wants to implement.
But no charge by the Democrats is more wildly untrue than their claim the tax cuts have slashed federal revenues and thus have caused the deficit. Quite the opposite, the tax cuts have fueled economic growth that has boosted the flow of tax revenue into the Treasury.
If you have been reading the news stories about the budget deficit over the past year or two, you may have noticed they reported "unexpectedly higher revenue growth" which in turn has cut the budget deficit in half just as Bush had forecast. Indeed, burgeoning tax revenues has been one of this administration's strongest fiscal achievements.
"Tax revenues in 2006 were 18.4 percent of gross domestic product (GDP), which is actually above the 20-year, 40-year and 60-year historical averages," writes Heritage Foundation budget analyst Brian Riedl in a new study.
"The inflation-adjusted 20 percent tax-revenue increase between 2004 and 2006 represents the largest two-year revenue surge since 1965-1967," he reported. Thus, Democratic charges "that Americans are undertaxed by historical standards are patently false."
There are only two ways to reduce and eventually eliminate the budget deficit -- slow the rate of growth in spending and accelerate the growth of the economy.
Congress has failed abysmally to curb spending, but the Bush tax cuts have sharply increased tax revenue. His proposed budget forecasts that the feds will rake in $2.66 trillion next year, most of it from individual and corporate income taxes.
Democrats say that revenue number is unrealistic. But if the economy continues to grow by 3 percent or more this year and next -- as I expect it will -- tax revenues will be even higher. All that is needed now is to apply the brakes on spending.
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