WASHINGTON -- The Concord Coalition said today that President Bush's fiscal year 2006 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, the budget's narrow 5-year window ignores the cost of major initiatives such as permanently extending expiring tax cuts and allowing workers to divert a portion of their Social Security taxes into personal accounts.
“The main problem with this budget is not what's in it, but what's left out. It assumes that the upcoming $81 billion supplemental spending request for Iraq and Afghanistan will be the last one and that the Treasury will get a growing revenue windfall from the alternative minimum tax (AMT). Neither is a realistic assumption, and in fact, neither is Administration policy. The cost of continuing the war efforts and providing AMT relief could easily add another $500 billion to the deficit over the next five years and over $100 billion in 2009 alone. Rather than cutting the deficit in half, as the Administration proposes, its budget policies are more likely to result in persistent annual deficits of about $400 billion,” said Concord Coalition Executive Director Robert L. Bixby.
“The President deserves credit for proposing cuts in entitlement programs. Any serious deficit reduction plan must do so. On the other hand, closing the budget window at 5 years omits the cost of the President's two biggest initiatives - permanent extension of expiring tax cuts and Social Security reform. Given the huge demographic challenges that begin to impact the budget over the coming five years, we need to take a longer view of how today's policies will play out,” Bixby said.
Concord highlighted two policies with sharply higher costs in the second five years:
The revenue loss from the Administration's tax cut proposals will be more than ten times as much in the second five years ($1.18 trillion) as in the five years covered in the budget ($106 billion).
The Concord Coalition is a nonpartisan, grassroots organization dedicated to balanced federal budgets and generationally responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and Bob Kerrey (D-NE) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president.