Finally, finally Senate Democrats will unveil a budget proposal Wednesday—for the first time since 2009—as Senate Budget Committee chair Patty Murray (D-Wash.) gives her party’s answer to her House counterpart Paul Ryan, who presented his own proposal Tuesday.
Congratulations to the Democrats for gracing us with a budget after all these years—an unconscionable dereliction of duty—but what’s been previewed thus far is pretty weak tea.
The headline, of course, is that the Murray budget, which would reduce the deficit by $1.85 trillion over the next ten years, is split half and half between $975 billion in spending cuts and the same amount in increased revenue—largely from limiting deductions and exemptions in the tax code.
This is standard Democratic policy and represents the “balanced” approach to deficit reduction President Obama has repeatedly supported.
But a closer look—and the most rudimentary take on the politics of it—shows that Senate Democrats’ budget is in its own way just as fanciful as Ryan’s.
First, it assumes $242 billion in reduced interest payments from adopting the proposal. That’s less than the ludicrous $700 billion the Ryan proposal expects to save in debt service over the next decade. But hello, everyone: Iinterest rates are now close to zero. If the economy improves to the extent both Democrats and Republicans expect it to, rates will move up sharply, probably canceling out most of these savings.
The Democratic plan also calls for lower spending cuts than Ryan asked for and omits the overhaul of Medicare the Republican proposed. However, it, too, would cut health care spending, by $275 billion, and defense spending by another $240 billion. As part of the package, the Democrats slip in another $100 billion in new “investment” in infrastructure building and job training programs—perhaps wetting the beaks of the Krugman wing of the party.
It’s unclear at this point how much of this proposal is new and how much would substitute for the automatic spending cuts under the “sequester.”
But one thing is certain—most of it is dead in the water.
As Ryan’s proposal embraced fundamental Republican dogma, this one clings to cherished Democratic notions that we really don’t have to change Medicare and Medicaid all that much. Perhaps that could be a chip for a “grand bargain,” although liberal Democrats are balking at the idea.
And Murray hasn’t yet provided details on which health programs will be cut and which exemptions and deductions reduced, leaving it “to other committees,” The Washington Post reported. (After punting on a budget for four years, you didn’t expect Democrats to take the bull by the horns, did you?)
Those details, of course, are full of devils. The deductions for mortgage interest, state and local taxes, corporate health care plans, and charitable contributions are where the big money is, but they’re very popular and have the backing of big, powerful lobbying groups that would fight like heck to preserve them.
And besides, Republicans have said they would adamantly oppose any new revenue increases in addition to the $650 billion they accepted in the New Year’s day deal to avert the fiscal cliff.
So, right now it looks like this proposal is just Act One, Scene Two in what could be another long budget drama that ends in tragedy.