Democrats' new budget proposal: why it's balanced ... but not balanced (+video)
Senate Democrats have put forward a new budget proposal that offers balanced deficit reduction (between cuts and new tax revenue), but doesn't balance the budget.
Senate Democrats put forward a budget whose broad outlines contrast sharply with a rival plan from House Republicans: It avoids controversial entitlement cuts but goes only a small way toward confronting the long-term challenge of a rising national debt.Skip to next paragraph
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Sen. Patty Murray (D) of Washington, chairwoman of the Senate Budget Committee, used the word “balance” in a different context. Her plan blends some new tax revenue and some spending cuts to produce a more modest amount of deficit reduction – all while avoiding steep cuts to Democratic priorities.
“House Republicans would dismantle Medicare,” the summary of the Senate Budget Committee stated. “They would slash the investments in infrastructure, education, and innovation that we need to lay down a strong foundation for broad-based growth.”
What’s needed now is to reach out for potential common ground, senators of both parties said. Both sides agree on the need to replace the “sequester,” the automatic spending cuts that will remain in place for 10 years unless some alternative fiscal plan is reached.
Here’s a tour of the Democratic plan and how it contrasts with the House Republican plan put forward Tuesday by Representative Ryan.
Deficit reduction: $1.85 trillion
The plan envisions equal amounts tax revenue and spending cuts to reduce deficits by $1.85 trillion over the 10-year budget window. The cuts included in this tally would replace those of the sequester.
This, combined with spending cuts and tax hikes already enacted over the past two years, would amount to total deficit reduction of more than $4 trillion, a goal that President Obama has set. That would be enough to keep the national debt from rising as a share of gross domestic product (GDP) over the next decade.
But many budget experts say that, at about 73 percent of GDP, the public debt is already so high that it leaves little fiscal leeway to deal with unforeseen circumstances, such as another deep recession.
Moreover, stabilizing the debt through 2023 doesn’t mean it will remain stable thereafter. Rather, health care spending will likely push the debt persistently upward after that time, forecasters say.
The nonpartisan Committee for Responsible Federal Budget has called for $2.4 trillion in deficit reduction beyond the spending cuts and tax hikes enacted over the past two years.
The Ryan budget seeks some $5.7 trillion in additional deficit reduction.