The Senate Budget Committee has approved a budget resolution that calls for deficits to be reduced $671 billion below the levels in the President’s budget over five years. The resolution envisions that deficits will be reduced to 3% of GDP by 2015, compared to 4.3% in the President’s budget. For 2011, the committee's projected deficit is 8.4% of GDP ($1.26 trillion).
It is encouraging that the Senate budget resolution sets a higher deficit reduction goal, freezes non-security discretionary spending for three years, enforces discretionary spending targets with multi-year caps, and provides a reserve fund to help ensure that any savings from recommendations of the President’s bipartisan fiscal commission will be used for deficit reduction. The resolution, approved Thursday, also assumes that Alternative Minimum Tax (AMT) and estate tax relief will be paid for after two years in accord with the new pay-as-you-go law. This assumption accounts for much of the improved outlook in the final three fiscal years of the plan.
These are fiscally responsible goals. However, they will not be met unless Congress actually votes to offset AMT and estate tax relief proposals and abides by the discretionary spending caps without resorting to gimmicks such as questionable "emergency" spending designations. This will require political courage that policymakers have repeatedly failed to demonstrate when considering similar proposals in recent years.
It is troubling that the resolution includes a reconciliation instruction that requires only a token amount of $2 billion in deficit reduction when the annual budget is approaching $4 trillion and the projected deficit over the five years covered by the plan totals $3.9 trillion. This suggests that the intent behind the instruction may not be significant deficit reduction as much as the use of expedited reconciliation procedures for other purposes. Sen. Judd Gregg (R-N.H.) successfully offered an amendment creating a new point of order against reconciliation bills with spending that exceeds 20% of the deficit reduction target. This was a positive addition.
The next step will be consideration of the budget resolution by the full Senate. The Concord Coalition commends the Senate Budget Committee for taking the fiscally responsible step of moving forward with the budget resolution this year and urges the House Budget Committee to do the same.