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The Battle Over Budgeting and Congress as Microcosm

January 2, 2007 - by Donny Shaw

So I have been traveling around the country for the past couple of weeks doing all sorts of festive things, but I am back and getting ready for Congress to convene on Thursday.

The new Democratic Congress is likely to pass pay-as-you-go budgeting rules in their first few days. Pay-as-you-go, or Paygo, makes it so that any spending that Congress approves must be payed for by an equal gain in money somewhere else. The plan, if working perfectly, balances the budget deficit, because there is no new money involved. Money is redistributed throughout the country in an attempt to put it in the places that are most effective.

Paygo hasn’t always been a program of the Democrats’. The Republican Congress led by Newt Gingrich followed Paygo rules and balanced the budget throughout the 90s. It wasn’t until G.W.Bush’s tax cuts were instituted, that Republicans in Congress were forced to give up their hardball budget policies in favor of a politically strategic and popular maneuver. Tax cuts are capable of charming people in a way that a balanced budget never will; you can feel it in your gut-wallet.

So, with no rules, the 108th and 109th Congress just went crazy spending. They began with a record budget surplus and ended with a record budget deficit. The number became startling enough to be a factor in their defeat, and the 110th Congress is going to take the public’s concern and run with it.

This article suggest that Bush will veto any bill that he thinks involves overspending. This “would be a change for a president who has never vetoed a spending bill, and who has presided over a rapid expansion of the federal budget. It suggests he may be ready to embrace frugality at last.” Overspending is of course subjective, and he could veto something citing overspending, and look good for being responsible.

This article suggest that Bush will veto any bill that increases taxes. This likely includes any bill that institutes Paygo. There are other ways to get money than across the board tax increases. An Alternative Minimum Tax, or AMT, could be put back in place, that would be one way to raise tax rates for the wealthiest taxpayers. Congress could invest in programs that work to collect taxes and close the difference between taxes owed, and taxes paid, that is about $350 billion annually.

Republicans are traditionally considered the more fiscally responsible party, while Democrats are considered that party that spends freely creating programs around the country. Those positions are in a strange flip-flop for now. Democrats are relinquishing the opportunity to spend big on programs with the 2007 budget that was left to them by taking out earmarks and leaving funding decisions up to the Bush administration, semi-willingly causing the elimination or major shrinking of many programs. (Check out the previous articles in this blog for more on this). Both sides in the government division are going to be saying that they actually do what the other side only says that they do. Voters that are firmly Democrats, or firmly Republicans, likely won’t change the way they vote, but those in the expanding middle could potentially see the best of both worlds in a single party.

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