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Democrat Spending May Mean Higher Taxes

by Mike Godfrey, Tax-News.com, Washington

07 November 2006

The Democratic Party's 'New Direction for America' might put America's finances back onto a more sound footing, but it is also likely to lead to an increase in federal spending and higher taxation, according to one study of the Party's policies.

As Americans prepare to go to the polls in today's mid-term elections, a line-by-line analysis of the Democrat program by the National Taxpayers Union Foundation (NTUF) found billions of dollars worth of new spending.

One of the largest of these spending programs is the 'G.I. Bill of Rights for the 21st Century.' This would provide increased pay, health care, and other benefits for veterans and their families, but would also increase outlays by $99 billion over 5 years and be offset by increasing the top income tax rate.

Furthermore, NTUF Senior Policy Analyst Demian Brady, who conducted the review, noted that several of the "cost unknown" items, such as the proposal to screen 100% of all inbound US cargo, could significantly affect the net total spending increase that the Democratic agenda seeks.

"Americans should take note that proposals containing many political promises are likely to contain many tax dollars as well," Brady noted.

"Given that the average House Democrat's agenda in the last Congress would have boosted spending by $521 billion, the 'New Direction for America' may appear to be modest. Many taxpayers, however, are probably hoping that if Democrats take control of Congress, they will somehow find the fiscal responsibility on Capitol Hill that has been lost amongst slabs of pork-barrel spending and IOUs from unfunded program liabilities," he added.

Other major spending plans on the Democrat agenda include a proposal for an 'AmeriSave' account system, whereby the federal government would establish a dollar-for-dollar federal match for the first $1,000 contributed to a personal retirement plan. This would cost taxpayers another $7.5 billion each year, the NTUF claims.

However, healthcare spending, at $28.8 billion, is the largest item in the spending program, accounting for 36% of the total. Proposed reforms to the Medicare prescription drug program would cost $29.5 billion annually, the study claims.

Education spending, at $16.2 billion, represented approximately 20% of the total net agenda. Plans to increase educational grants, recruit more teachers and decrease the interest rates of college loans would add an additional $15 billion in annual spending.

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