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US House Narrowly Approves 2008 Budget Resolution

by Mike Godfrey,, Washington

02 April 2007

The US House of Representatives last week passed by a narrow majority a Fiscal Year 2008 budget resolution, which, according to Budget Chairman John Spratt (D-SC), embraces tax relief for middle-income Americans while championing children’s health care, education, and veterans health care and bringing the budget into balance in five years.

The non-binding resolution passed by a vote of 216-210 after two days of debate, and now must be reconciled with a similar Senate version passed the week before last.

Spratt said that his budget includes a deficit-neutral reserve fund to accommodate middle income tax cuts, such as extension of the child tax credit, marriage penalty relief, extension of the 10% individual income tax bracket, elimination of most estate taxes, extension of the research and experimentation tax credit, extension of the deduction for state and local sales taxes, and a tax credit for school construction bonds. Another deficit-neutral reserve fund keeps the AMT – the Alternative Minimum Tax – from ensnaring middle income taxpayers for which it was never intended.

Spratt also claimed that his budget restores a number of spending cuts proposed in the President’s budget. It adds $6.6 billion over Fiscal Year 2007 for veterans health care; $50 billion over five years for the State Children’s Health Insurance Program (S-CHIP); and $7.9 billion over the President’s budget for education.

“This is a balanced budget with balanced priorities,” said Spratt. “It shows that Democrats are fiscally responsible, and can budget, and that we are charting a new course for America.”

“These increases help sustain good programs that work for millions of Americans, and good programs that Democrats believe in,” he added.

A central feature of the Spratt budget is the “pay as you go” rule adopted by House Democrats in the first days of the new Congress. It requires that any entitlement spending increases or tax cuts be offset.

Spratt said that his budget does not raise taxes, but rather seeks to enhance revenues by narrowing the 'tax gap'– the difference between taxes owed and taxes collected – and by cracking down on waste, fraud, and abuse in government programs.

However, Republicans in both the House and Senate continue to argue that Democrat budget proposals will lead to a huge increase in taxation, while adding massively to expenditure.

"The tax burden of every man and women in America who works for a living will be increased under the Democratic leadership’s budget, forcing 115 million taxpayers to pay, on average, an additional $1,795 in the next few years," Rep. Roy Blunt (R - Mo.), the House Minority Leader, said in a statement.

"Small business owners – the 26 million Americans who are the backbone of our economy – will also see their taxes increases by nearly $4,000. And taxes would increase by an average of $2,181 for the 42 million American families with children," he argued.

"The Democrats’ budget proposal is also conspicuous in its silence on ways to rein in runaway entitlement spending," Blunt added. "Absent meaningful action by Congress on Medicare, Medicaid, and Social Security, estimates suggest the federal budget deficit will skyrocket to as high as 20% of national GDP within the next three decades. The deficit currently stands at 3.5% of GDP.

Commenting on the 2008 Senate Budget Resolution, passed earlier in the month, Sen. Chuck Grassley, ranking member of the Senate Finance Committee, said Democrat proposals would lead to "the largest tax increase ever."

"This budget puts a burden on the Finance Committee to come up with $916 billion," he claimed.

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