Senate Approves 2009 Budget

by Mike Godfrey, Tax-News.com, Washington

06 June 2008

The United States Senate on Wednesday gave its final approval to the fiscal year 2009 budget conference report.

According to the Democrat majority, the five year fiscal plan, which was adopted on a bipartisan vote of 48-45, balances the budget while cutting taxes for the middle class, and providing investment for education, energy and infrastructure.

With an affirmative House vote expected on Thursday, it will mark the first time Congress has adopted a budget during an election year since 2000.

“We have passed a fiscally responsible budget today,” commented Senate Budget Committee Chairman Kent Conrad (D-ND). “This plan provides tax relief for the middle class. It makes critical investments in energy, education, and infrastructure. And it returns the budget to surplus in 2012 and 2013. Passing this budget represents a major accomplishment.”

Conrad argued that the budget resolution restores the fiscal discipline that was "abandoned" by the Bush administration and the previously Republican-controlled Congress, and puts the nation back on a path to balance – reaching a surplus of USD22bn in 2012 and USD10bn in 2013.

He also stated that the plan reduces debt and spending as a percent of GDP each year of the budget, adheres to key budget enforcement tools implemented last year such as the pay-as-you-go rule, and includes additional procedural protections to help ensure what he dubbed "fiscal responsibility".

Conrad countered Republican claims that the plan is an example of Democrat "tax and spend" by pointing out that there is only a 1% difference in the overall spending levels between the 2009 budget and President Bush's fiscal plan.

He also argued that the budget does not assume any tax increase, and actually supports tax relief through extension of marriage penalty relief, the child tax credit, and the 10% bracket, as well as allowing for estate tax reform.

In addition, he stated that it includes an additional year of Alternative Minimum Tax relief, and provides for property tax relief, energy and education tax relief, and extenders.

Over the five years of the budget resolution, revenue levels are 2.9% above the levels assumed in the President’s budget. Conrad suggested that this additional revenue could be achieved by closing the tax gap, addressing offshore "tax havens", shutting down abusive tax shelters, and not by raising taxes.

The Republicans however, see the budget resolution rather differently.

“For the second year in a row, the Democratic majority has crafted and passed a tax-and-spend budget – one that most Americans can’t afford as they struggle with a slowing economy and rising food and fuel costs,” argued Senator Judd Gregg (R - NH), ranking member of the Senate Budget Committee.

Gregg argued that, contrary to Democrat claims, the budget actually includes "the largest tax increase in history," and passes the USD1tn mark in annual discretionary spending, while ignoring the pressing issue of USD66tn in unfunded entitlement obligations.

“For average Americans, this budget means that 43 million families with children will owe USD2,300 more in taxes; 18 million seniors will owe USD2,200 more; 27 million small business-owners will owe USD4,100 more; and 7.8 million low-income workers will be added back to the tax rolls," Gregg commented.

“The Democrats’ big-government budget is clearly a disappointment, and shows a lack of awareness of the financial challenges already squeezing American families and businesses. I will continue to work to lessen the tax burden on hard-working taxpayers, address our long-term fiscal obligations and better position the economy to rebound," he concluded.

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