Today, the House of Representatives will vote on the House-Senate Budget Conference Report. The Congressional leadership claims it is a "fiscally responsible" budget that stays within the budget caps, but that is only because the budget hides $39 billion increase in "defense" spending in the Overseas Contingency Operations (OCO) slush fund.
Campaign for Liberty joined a collation letter sent to every Representative and Senator asking they oppose the budget conference report because of the OCO funding. Text of letter here and below:
Dear Representative:
Of course, OCO is far from the only reason to oppose this budget. Writing at National Review, John Gray of the Heritage Foundation has a must-read piece explaining why this budget is balanced in name only:
The trickery begins with the presence of nearly $2 trillion in bogus tax revenues (over ten years). Both the Senate and House budgets start by assuming two fundamental policy measures: first, that nearly 70 minor tax cuts known as “tax extenders” are renewed, and second, that Obamacare is repealed, including the taxes that fund it. So far, so good. Unfortunately, this story quickly turns into one part fiction, one part hyperbole. In the mythical land of Washington budgeteers, the $2 trillion in tax revenue that would be lost under these assumptions magically reappears in the budget as the result of what is known as “revenue-neutral tax reform.”
The phrase “revenue-neutral tax reform” suggests that even with a complete overhaul of the tax code, the new tax system will be designed to raise the same levels of revenue as was projected under the current tax code. Without details on how this would be accomplished, Republicans should at most assume revenues to be no more than the long-term average, as a percentage of the economy (GDP). However, without any details on what the new tax system will look like, there are problems with the current budget’s revenue assumptions, particularly when they’re being used to balance the budget.
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On one hand, Republicans extol the importance of lowering taxes to help businesses and the economy. But on the other, their budgets depend on replenishing those tax cuts dollar-for-dollar with unspecified tax increases somewhere else. That’s either a confused economic theory or a blatant accounting gimmick.
Then there’s Obamacare.When Obamacare was passed, it included huge amounts of new entitlement spending, to be funded by $1 trillion in new taxes. This didn’t sit well with the American public, and Republicans rode the “repeal Obamacare” slogan to majorities in Congress. Delivering on their promise, both Republican budgets assume that Obamacare is repealed, at least partially. But they retain the $1 trillion in Obamacare taxes to balance the budget.That’s right: The Republican budgets scrap Obamacare’s spending, but keep its tax revenues to fund other government largess. In an attempt to explain themselves, the budget authors will again claim that the revenues that are repealed along with Obamacare will be replenished, dollar for dollar, from tax reform. This is disingenuous. Was any Republican politician ever heard pitching: “We will repeal Obamacare, but will have to increase your taxes elsewhere to make up those revenue losses”? In effect, that’s what these budgets envision, though they do their best to keep quiet about it. Obamacare taxes were enacted to pay for an expensive new entitlement program. When Obamacare is repealed, so too should be the revenues that pay for it. That $1 trillion in static revenues should not be included in the equation for revenue-neutral tax reform in the future. Period....While a balanced budget is not synonymous with small government, balancing the budgets with legitimate revenues that account honestly for the repeal of Obamacare and the extension of the tax extenders would have been a step in the right direction. As Republicans gather to work out a single, final version of the budget resolution, they have the chance to fix this unfortunate accounting gimmick. They should use it to ensure an honest budget — one that actually balances.
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PDFTags: Budget