Congress Approves 2006 Budget Blueprint

by Mike Godfrey, Tax-News.com, Washington

03 May 2005

Despite Democratic objections to spending cuts on government entitlement programs, agreement on the 2006 Budget Resolution was reached on Friday by Senate and House negotiators, leaving the way open for $70 billion in tax cuts.

According to Senate Budget Committee Chairman Judd Gregg (R-NH), the $2.6 trillion budget restrains long-term entitlement growth, reduces short-term deficits and puts in place strong enforcement tools to put the budget on a more responsible path.

Gregg noted that for the first time in nearly a decade, the budget takes large steps towards cutting mandatory government programs such as Medicaid, which he believes are driving "out-of-control, long-term deficits".

"The 2006 Budget Resolution mandates long-term entitlement reform, contemplating crucial improvements in the efficiency of Medicaid and solvency of the Pension Benefit Guarantee Corporation, among other programs. The agreement also creates a new budget point of order against new long-term spending," a Senate Budget Committee statement explained.

The budget blueprint retains some $70 billion in tax cuts, which could include extensions to capital gains and dividend tax cuts that are set to expire at the end of 2008.

Democrats unanimously opposed the measure, criticizing the decision to cut benefits for the poor whilst also cutting taxes.

"Like the President's budget, it increases deficits and debt, leaves out large costs, includes more deficit-financed tax cuts, and focuses on the wrong priorities for the American people. Deficits would not be cut in half under this resolution," argued ranking Democrat Kent Conrad.

"When omitted costs are factored in, such as realistic ongoing war costs, the Social Security surplus being spent on tax cuts and other things, and AMT reform, we see that operating deficits will remain above $500 billion every year and reach $569 billion in 2010," he added.

However, Gregg countered that the successful passing of the budget was "an important step toward addressing the challenges that face our nation".

“The essence of this budget comes down to whether we’re going to stick our children and grandchildren with a government they can’t afford. This budget takes a modest but important first step toward entitlement reform, cuts the short-term deficit in half, puts important tools in place so Congress can enforce spending discipline and improves transparency and good budget practices," Gregg stated.

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