Sources: Democrats' New Budget May Actually Accelerate Spending

Posted: Mar 13, 2013 10:52 AM

Bear in mind that this is the same crew whose most recent "deficit reduction" plan increased the deficit by tens of billions, who are trying to redefine tax increases as "spending cuts," and whose idea of a "balanced approach" doesn't actually involve balancing the budget.  Still, inventing close to $2 trillion in phony, fig-leaf deficit reductions is a pretty tall order.  Yesterday I briefly called attention to a piece in The Hill that sketched out the broad contours of Senate Democrats' forthcoming budget proposal -- their first in nearly four years.  It's now widely accepted that Harry Reid and Patty Murray's document will call for approximately $1 trillion in tax increases, but will never come to balance.  A number of articles on the yet-unseen document simply accept Democrats' preliminary claim that their blueprint will include $1.85 trillion in deficit reduction.  Will it, though?  Back to Erik Wasson's piece in The Hill:

[Senator Patty] Murray argues that her budget cuts $1.85 trilion from deficits over ten 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. The details of Murray’s budget came hours after House Budget Committee Chairman Paul Ryan (R-Wis.) released his budget, which reduces tax rates and slashes spending much more deeply that Murray’s budget. The Ryan budget would balance in 10 years without raising taxes and by reducing spending over the next decade by $5.7 trillion compared to the CBO baseline.

First, Wasson exposes Democrats' trillion-dollar juke, which they try to pull off by not accounting for shutting off the sequester (a huge spending increase, which they proceed to offset with phony savings and tax hikes).  This stunt leaves them with only $800 billion remaining in supposed deficit reductions.  Now pay attention to the phrase, "compared to the CBO baseline" in the excerpt above.  Paul Ryan is careful to assert that his budget saves $4.6 trillion over ten years compared to the "current path," even though the CBO line inflates that number to $5.7 trillion.  Why would Ryan decline to take credit for an extra trillion in savings?  Because that misleading CBO baseline bakes in a number of illusory "savings" via the discontinuation of spending that was going to expire anyway, and other gimmicks.  Wasson expands on this point:

The $975 billion in spending cuts include $240 billion in savings from the end of the Afghanistan war and $242 billion in reduced interest payments, according to a source. Republicans have criticized Democrats in the past for counting these as spending cuts, and Ryan made a point in his budget of producing a different baseline that did not count CBO’s projected savings from war and disaster spending.  

So right off the bat, roughly half ($480 billion) of the $975 billion in purported "spending cuts" are exposed as gimmickery.  That calculation comes from adding up the interest payment savings (which were going to materialize anyway, due to the sequester) and the fake Afghanistan war savings (CBO is forced to assume war spending will continue to be funded at 2013 levels for the next decade, which everyone agrees isn't going to happen).  Democrats subtract expected Afghanistan spending from the fictional inflated level, and dress it up as "savings."  Whereas Ryan disdains and abjures these "moon yogurt accounting" tricks, Democrats rely on them.  This year, they have another card up their budgetary sleeve: Hurricane Sandy relief.  The CBO baseline unrealistically assumes that tens of billions in federal Sandy aid will continue every year for the duration of the budget window.  This, of course, is absurd.  Sandy was a one-time natural disaster, not a recurring expense.  But by citing the CBO baseline, Democrats are likely to say they're "saving" hundreds of billions by not spending big bucks on Hurricane Sandy in 2014, 2015, 2020, and so on.  All told, dishonest accounting appears to cover the majority of the "spending cuts" in Murray's budget -- and other cuts, like the unspecified ones to healthcare spending, are punted away for other committees to handle.  A senior Senate Republican budget aide tells Townhall this actuarial sham is outrageous, but not surprising:

Even though Senate Democrats haven’t produced a budget for four years, in various fiscal negotiations, they’ve repeatedly tried to claim savings from money that was never going to be spent anyway. And the President has a nasty habit of abusing this widely panned gimmick. You’d have to be naïve to think they won’t try it again, given the party’s aversion to real spending reductions.  

If the rough figures reported in The Hill and elsewhere prove to be roughly accurate, it's a fairly safe bet that the Reid/Murray plan will amount to a significant net spending increase, above and beyond the current path.  Look at it this way: House Republicans' budget calls for about $41.5 trillion in federal spending over the next ten years.  The current trajectory spends approximately $46 trillion during the same span.  Democrats' proposal will likely exceed $46 trillion, and may even approach $47 trillion.  The only way Democrats can maintain any veneer of deficit reduction is through their tax increases; the phony spending cuts are all eaten up by new spending, including a reported $100 billion earmarked for new "stimulus."  To the extent that Democrats achieve any deficit reduction, virtually every single dollar of it will come from tax increases alone -- which violates even the president's distorted definition of "balance."

Senate Republicans can only offer educated guesses, based on past behavior and media leaks, about what lies ahead in this budget.  Remember, they won't actually see it until this evening (Paul Ryan provided House Democrats with advanced copies of his plan).  Drawing on all the available information, Republican sources say they expect the Democrats' budget to massively hike taxes, punt on entitlement reform, substantially increase spending beyond current levels, and never balance -- all while relying heavily on smoke and mirrors.  In other words, it will look an awful lot like President Obama's last two budgets, both of which were so reckless and unserious that they were unanimously voted down in both houses of Congress.  Will this low bar suddenly become good enough for Senate Democrats?  Even the ones who are up for re-election in 2014, particularly in red and purple states?

UPDATE - Senate Budget sources now say they're anticipating some limited deficit reduction in the Democrats' plan.  The jury's still out on total spending.

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