House Democrats Push Back Against GOP Spending Cuts

House Democrats on Monday stepped up their attack on the congressional Republicans’ ten-year balanced budget plan while outlining an alternative approach that they say would do far more to bolster the economy and help the middle class.

With several notable exceptions, the Democrats’ fiscal 2016 budget alternative largely reflects President Obama’s budget priorities, with far greater emphasis on tax breaks for the middle class and increased domestic and defense spending than long-term deficit reduction.

Related: House and Senate Duke It Out over Defense Spending

Last week, the GOP-controlled House and Senate Budget Committees approved budget plans that would achieve a balanced budget in the coming decade through as much as $5.5 trillion of spending savings but no increase in taxes.

Democrats denounced the proposals, which go to the floor for House and Senate action this week, as rife with “accounting gimmicks” and deceptions. The GOP budget plans, for instance, technically preserve tight spending caps on defense and domestic programs under the 2011 Budget Control Act, yet they provide for nearly $40 billion of increased backdoor spending on defense.

Moreover, the Republicans’ budgets take credit for $1 trillion of projected taxes from the Affordable Care Act, even while their budgets calls for repeal of Obamacare. Food stamps, which grew dramatically during the great recession, and other welfare programs provide the bulk of the more than $1 trillion in savings.

Related: The Government's $125 Billion Slap in the Face to Taxpayers

“If you look at our budget, the number one priority is accelerating economic growth in a way that produces more shared prosperity,” Rep. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, said on a conference call today.

“Unlike the Republican approach, which is the top-down, trickle-down theory that giving tax breaks to millionaires will somehow trickle down through the economy and lift everybody up, we believe that the economy grows fastest and best when you’re making sure that hard working Americans are getting fair pay and increasing wages.”

The Democratic plan promotes a series of liberal priorities, including an increase in the minimum wage, paid sick leave, boosting preschool funding, and new infrastructure spending. It also urges the government to consider the need for long-term care for the elderly– huge and fast mounting costs not currently covered by Medicare.

Related: House GOP’s Creative Accounting Lifts Defense Budget

A central component of the Democratic budget is tax reform to boost tax credits for middle-income earners. Those measures include an expanded Earned Income Tax Credit for low earners and the Child Tax Credit that are both set to expire in 2017.

The Democrats are proposing a “deficit neutral” tax package that would offset benefits for the middle class by eliminating tax loopholes for corporations and wealthier Americans – such as special appreciation allowances for corporate jets, carried interest for hedge fund operators and other preferential treatment of interest and dividends. There are no proposals for rate increases.

Over the ten years of the Democratic plan, the total public debt would rise from $13.8 trillion in 2016 to $19.9 trillion in 2025, according to a House Democratic budget document. As a percentage of the overall economy, the public debt would gradually decline, from 73.3 percent in 2016 to 70.2 percent in 2025.

The Democrats are seeking new tax credits for child care and two-earner families. They are also urging approval of a measure that would eliminate tax deductions for executives' bonuses at companies where rank and file employees did not receive pay increases in line with their productivity and the cost of living.

That last provision, being pushed by Van Hollen, was not part of the president’s 2016 budget proposal. Nor did the Democrats embrace all of Obama’s proposed Medicare savings. And within the discretionary budget area, the Democrats objected to the president’s proposed cuts in federal home heating and cooling subsidies.

Related: The Federal Debt Is About to Become a Big Issue Again​​

"We believe that the Republican budget proposal is the wrong direction for America but we also think that it's important that we present an alternative," Van Hollen said. "Our budget is a budget to reward Americans who are working hard every day to get ahead."

Democrats say their approach builds on 60 consecutive months of private sector job growth, an unemployment rate that is the lowest in over six years, and more job growth in 2014 than in any year since 1999. They say their plan also makes more sense than draconian cuts in health care and other social services, and would put the government on a more sensible glide path towards reducing and stabilizing the deficit in the coming years.  

The deficit for fiscal 2015 is projected to total $486 billion under current law. CBO estimates that under the President’s policies, the deficit would fall to $380 billion in 2016 and then increase (in nominal dollars) in each subsequent year of the 10-year period, growing to $801 billion in 2025 or 2.9 percent of GDP.

Related: Obama Would Violate Budget Control Act with $34B More for Defense

The House Democratic blue print would do a little better than that, leading to a $717 billion deficit by 2025, or 2.5 percent of GDP. In all, deficits under the Democratic plan would total $5.9 trillion over that period, or about $1.1 trillion less than the cumulative deficit in the Congressional Budget Office’s baseline.

By contrast, House and Senate GOP leaders boast that the budget will be near to or at surplus levels by then under their approach, without having to raise taxes. "The Republican claim that their budget balances is purely smoke and mirrors," Van Hollen insisted today.

Meanwhile, a new analysis by the Center on Budget and Policy Priorities found that “[the GOP] budgets would cut more than $3 trillion over the coming decade from programs that serve people of limited means.”

Related: Four Lawmakers Head to the Hill for a Budget Brawl

“Each budget plan derives more than two-thirds of its non-defense budget cuts from programs for people with low or modest incomes even though these programs constitute less than one-quarter of federal program costs,” according to the report. “Moreover, spending on these programs is already scheduled to decline as a share of the economy between now and 2025.

The House Budget Committee Plan
As Table 1 indicates, the House Budget Committee plan proposes $5.3 trillion in non-defense budget cuts through 2025.  These cuts are in addition to the cuts dictated by the 2011 Budget Control Act’s (BCA) budget caps and sequestration.

TABLE 1

The Senate Budget Committee Plan

As Table 2 indicates, the Senate Budget Committee plan proposes $4.7 trillion [7] in non-defense budget cuts through 2025.  The reductions in low-income discretionary and entitlement programs likely account for at least $3.2 trillion — or 69 percent — of these cuts.  (See Figure 2.) 

TABLE 2

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