Makes A Bad Economy Worse. The final conference report on the Budget Resolution calls for the House to consider a tax cut bill totaling $550 billion. Instead of improving the economy, tax cuts of this size create long-term budget deficits, totaling over $1 trillion over the next 10 years, that more than 400 economists agree actually threaten economic growth. As the April 6th New York Times pointed out, “The slower growth that results from large deficits affects everybody. It leads to lost jobs, lower wages and fewer business opportunities.” Even a new report from the Congressional Budget Office using “dynamic scoring” for the first time failed to support the administration’s claim that its tax cuts would generate economic growth – with CBO finding “The overall macroeconomic effect of the proposals in the President’s budget is not obvious.”
Does Nothing to Create Jobs. Chairman Bill Thomas has vowed repeatedly that he would incorporate versions of the key features of the Bush economic plan within a $550 billion tax cut bill. The total job loss since President Bush took office is a staggering 2.6 million private-sector jobs. The Bush “economic growth” plan would create only 190,000 jobs this year – less than half the number of jobs lost in just the last two months. There is a broad consensus among economists that the centerpiece of the Bush tax cut package – the elimination of dividend taxes – does not create jobs. As the Washington Post pointed out, “Some say Bush should restructure his tax cut to drop the dividend tax elimination, which accounts for half of the package but provides a negligible economic boost in the short term. ‘Rather than shoehorning the dividend plan in, they should be trying to shoehorn in the most amount of economic stimulus,’ said Bill Dudley, chief U.S. economist for Goldman Sachs.”
Irresponsibly Piles Up Debt. Indeed, the GOP budget conference report is the most fiscally irresponsible budget ever adopted, saddling the next generation with a mounting national debt. When the Bush Administration came into office, there was a projected $5.6 trillion 10-year surplus. Under this GOP budget conference report, the country will pile up over $1 trillion in new debt. In January 2001, the Bush Administration promised to eliminate the then-$3.4 trillion in publicly-held debt. Now, the publicly-held debt will reach $4.3 trillion in 2004, under the GOP policies.
Voting for the GOP Budget Conference Report Is Voting to Raise The Debt Limit. As Majority Leader Tom DeLay pointed out on the Floor on April 3, “The vote on the conference report [on the budget] as far as the House is concerned is the vote on the debt ceiling.” In a repudiation of their own “Contract with America,” Republicans this past January revived a House Rule that deems passed by the House a Joint Resolution that increases the debt ceiling whenever a budget resolution conference report is enacted. Hence, by voting for the GOP budget conference report, the Republicans will be voting to increase the statutory debt limit by about $860 billion – from the current debt limit of $6.4 trillion to a debt limit of about $7.2 trillion.
The Conference Report’s Bifurcated Process Stalls Consensus and Action on The Economy. The House and Senate GOP leadership have made a mockery of the budget process by establishing a “bifurcated” budget process – providing for the House to consider a $550 billion tax cut bill but placing a 60-vote point of order against any tax cut bill in the Senate that exceeds $350 billion. As CQ has reported, “Republican leaders have devised unprecedented budget ‘reconciliation’ procedures in which the House and Senate will consider different tax bills and resolve their differences later.” At a time when Congress should be responding to the bad economic news by quickly enacting measures that will create jobs and get the economy moving again, this Republican Congress is stalling key decisions on the country’s future. The American people deserve better.