CBO Releases Its Budget Report, Dems Face Some Hard OptionsFebruary 27, 2007 - by Donny Shaw
The next phase in the budgeting process begins today. The Congressional Budget Office today issued its biennial “Budget Options” report. The report comes about three weeks after President Bush issued his 2008 budget proposal. The CBO report’s basic functions are to examine the presidential budget proposal and suggest options for altering it to make it fit with the budget goals on Congress. It will serve as a guidebook for lawmakers as they begin to set budget priorities, make changes, and adapt to the circumstances and dynamics of the process.
Major issues with the president’s budget are already being taken up by lawmakers. For example, House Energy and Commerce Health Subcommittee Chairman Frank Pallone (D-NJ) said yesterday that he has “no intention” of approving the President’s proposed budget for the State Children’s Health Insurance Program, or SCHIP. This New York Times article explains that recent “administrations had encouraged [Congress] to expand children’s coverage and had granted waivers allowing them to cover parents and even some childless adults.” However, the Bush budget proposal for 2008 would greatly minimize the program, bringing it back to its “original objective” of providing healthcare for the poorest of children. Pallone on The Hill Blog:
>The president’s budget makes it impossible for our government to meet the health care needs of the elderly, the disabled and the children of low-income parents who are now enrolled in SCHIP. By cutting $252 billion from Medicare over the next decade, $28 billion from Medicaid, and providing less than half of what is needed for SCHIP, the president is breaking our government’s obligation to provide health care to these vulnerable populations.
Democratic lawmakers, because of their new majority status, will largely be in control of budgeting for 2008. In addition to health care issues, funding for areas such as veterans affairs, non-war Defense Department funding, port security, and education have already been seen by congressional Democrats as underfunded in the President’s proposal. At the same time that they are looking to increase funding for these programs, Democrats are hoping to lower taxes for the middle class. For example, they want to update the alternative minimum tax to end its encroachment on the middle class.
But Democrats have further complicated their task of drafting a budget by vowing to remain fiscally responsible and not increase the federal deficit. They have approved new pay-as-you-go budgeting rules that require any increased spending to be offset by an equal increase in revenue. So far plans for increasing revenue have not been forthcoming.
According to the subscription-only CongressDaily, the CBO report outlines some tough options for Democrats to increase revenue:
>Congress must either find offsets under the “pay/go” rule, waive the rule and increase the deficit, or let some tax cuts expire. Other options include increasing all individual income tax rates by 1 percent, raising $445 billion, or increasing rates on taxpayers making more than $1 million filing jointly — or $500,000 for single filers — by 5 percentage points, raising $224 billion over 10 years.
>Other options outlined by CBO include delaying NASA’s mission to Mars by 5 years, to 2025, yielding $2 billion in FY08 and $48.7 billion over the next decade; replacing the mortgage interest deduction with a 15 percent tax credit for interest on mortgages of $400,000 or less on a primary residence only, raising $418.5 billion in revenues, and eliminating public financing of presidential campaigns, saving $500 million.