NCPA - National Center for Policy Analysis


May 23, 2007

Without much notice, Democrats have passed a budget resolution that would allow most of the Bush tax cuts to expire at the end of 2010.  Allowing this to happen would constitute the largest tax increase in American history, says the National Review.

The Democrats argue that their budget does not necessarily assume tax increases, although it projects higher spending and budget surpluses that couldn't be accomplished any other way, says the National Review:

  • As Brian Riedl of the Heritage Foundation noted, the Democrats' budget assumes that revenues will be $721 billion higher than the Congressional Budget Office estimates.
  • That's suspiciously close to the amount of money taxpayers are projected to save if the Bush tax cuts remain in place.
  • In fact, if one assumes that the Democrats preserve marriage-penalty relief, the child-tax-credit expansion and the 10 percent income tax bracket -- the cuts they are inclined to keep -- then the difference between the two amounts is erased.


  • The Democrats' budget increases discretionary spending by 9 percent, setting aside more money for hundreds of duplicative and ineffective government programs.
  • It also allows for the reauthorization of corporate welfare such as the Advanced Technology Program and massively wasteful farm programs.
  • Through these programs, the federal government directly transfers billions of dollars each year from taxpayers to some of the nation's most successful large companies, including IBM and Archer Daniels Midland.

The Democrats' budget is just as notable for what it doesn't include, says the National Review.  It does nothing to reduce massive unfunded liabilities in Social Security and Medicare, and doesn't provide a permanent solution to the Alternative Minimum Tax problem.  In fact, the only thing that seems certain are increased taxes on dividends and capital gains, and a big tax hikes for middle-class families.

Source: Editorial, "Tax and Spend Democrats," National Review, May 23, 2007.


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