Middle Class Families and Seniors Can’t Afford Another Democrat Budget

March 29, 2012

Democrats Latest Budget Doubles Down on Their Plan to Bankrupt Medicare, Hikes Taxes and Keeps Spending Money Americans Don’t Have

House Democrats will vote on their FY 2013 budget today, but the document is sadly no different from their budgets of the past in its commitment to bankrupt Medicare and trigger automatic benefit cuts and tax increases.
The latest Democrat budget also continues the Democrats’ incurable spending addiction and insists on more tax increases and borrowing from countries like China to pay for failed stimulus spending we can’t afford.
The Democrats continue to prove that they aren’t serious about reducing spending even as the growing debt threatens America’s economic growth and long-term prosperity.

House Democrats will vote on their FY 2013 budget today, but the document is sadly no different from their budgets of the past in its commitment to bankrupt Medicare and trigger automatic benefit cuts and tax increases:

HOUSE DEMOCRAT DOUBLES DOWN ON PLAN TO BANKRUPT MEDICARE:“House Democrats have released an election year budget proposal they say would begin to curb deficits without making major changes to growing entitlement programs like Medicare and Medicaid. by pairing spending cuts with higher taxes on the wealthy.” (Rosalind S. Helderman, “Democrats Release Budget to Compete with Ryan Plan,” The Washington Post, 3/26/2012)

LAST PROJECTION: MEDICARE WILL GO BANKRUPT IN 2024, FIVE YEARS EARLIER THAN FORECAST IN 2010: “Medicare’s trust fund will run dry in 2024, five years earlier than forecast just last year, and Social Security’s will be exhaused by 2036, adding fuel to the debate over cutting one or both programs to reduce annual budget deficits.” (Richard Wolf, “Medicare, Social Security Money Running Out Faster,” USA Today, 5/13/2011)

DEMOCRAT PLAN MEANS AN “IMMEDIATE 17-PERCENT REDUCTION” IN BENEFITS OR “IMMEDIATE 24-PERCENT INCREASE” IN TAXES: “The long-range financial imbalance could be addressed in several different ways. In theory, the standard 2.90-percent payroll tax and the additional tax 0.9-percent tax on high-income earners could be immediately increased by the amount of the actuarial deficit to 3.69 percent, or expenditures could be reduced by a corresponding amount. Note, however, that these changes would require an immediate 24-percent increase in the tax rate or an immediate 17-percent reduction in expenditures.” (pp. 28-29, “2011 Annual Report of the Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” The Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 5/13/2011)

AMERICAN ACADEMY OF ACTUARIES: BENEFIT CUTS COULD BE EVEN HIGHER: “The projected HI deficit over the next 75 years is 0.79 percent of taxable payroll. Eliminating this deficit would require an immediate 24 percent increase in payroll taxes or an immediate 17 percent reduction in benefits—or some combination of the two. Delaying action would require more drastic tax increases or benefit reductions in the future.” (“Medicare’s Financial Condition: Beyond Actuarial Balance,” American Academy of Actuaries, May 2011)

The latest Democrat budget also continues the Democrats’ incurable spending addiction and insists on more tax increases and borrowing from countries like China to pay for failed stimulus spending we can’t afford:

DEMS DOUBLE DOWN ON MORE OBAMA STIMULUS SPENDING: “The proposal adopts much of President Obama’s job-creation agenda, including tens of billions of dollars for near-term stimulus spending on infrastructure and other federal programs…” (Mike Lillis, “House Dems Introduce $3.6 Trillion Budget Plan,” The Hill, 3/27/2012)

DEM BUDGET ADDS $6 TRILLION TO DEFICITS OVER 10 YEARS, OR ABOUT $43,480 PER TAXPAYER:“The budget adds $6 trillion to deficits over 10 years, compared to $6.4 trillion for the president.” (Mike Lillis, “House Dems Introduce $3.6 Trillion Budget Plan,” The Hill, 3/27/2012; David S. Logan, “Summary of Latest Federal Individual Income Tax Data,” The Tax Foundation, 10/24/2011)

PROPOSES NEW TAX INCREASES: “The Democrats’ budget also would replace the $1.2 trillion in automatic spending cuts scheduled for January 2013 due to the supercommittee’s failure with a mix of spending cuts and tax increases.” (Seung Min Kim, “House Democrats on Budget: Hands Off Medicare, Higher Taxes,” Politico, 3/27/2012)

The Democrats continue to prove that they aren’t serious about reducing spending even as the growing debt threatens America’s economic growth and long-term prosperity:

UNDER DEM BUDGET, “NATIONAL DEBT WOULD CONTINUE TO GROW” WITH NO PROJECTION FOR A BALANCED BUDGET, EVER: “But the national debt would continue to grow — and documents accompanying the budget resolution do not indicate the proposal would lead to a balanced budget over any time frame.” (Rosalind S. Helderman, “Democrats Release Budget to Compete with Ryan Plan,” The Washington Post, 3/26/2012)

“NATIONAL DEBT HAS INCREASED MORE UNDER OBAMA THAN UNDER BUSH”: (Mark Knoller, “National Debt Has Increased More Under Obama than Under Bush,” CBS News, 3/19/2012)

THREE YEARS AND TWO MONTHS OF OBAMA IS MORE DEBT THAN EIGHT YEARS OF PREDECESSOR: “The National Debt has now increased more during President Obama’s three years and two months in office than it did during 8 years of the George W. Bush presidency.

“The Debt rose $4.899 trillion during the two terms of the Bush presidency. It has now gone up $4.939 trillion since President Obama took office.” (Mark Knoller, “National Debt Has Increased More Under Obama than Under Bush,” CBS News, 3/19/2012)

POLITIFACT SAID LAST YEAR THAT OBAMA WAS THE “UNDISPUTED DEBT KING OF THE LAST FIVE PRESIDENTS”: “Obama is the undisputed debt king of the last five presidents, rather than the guy who added a piddling mount to the debt.” (Louis Jacobson, “Nancy Pelosi Posts Questionable Chart on Debt Accumulation by Barack Obama, Predecessors,” Politifact, 5/19/2011)

OBAMA RECORD “THE MOST RAPID INCREASE IN THE DEBT UNDER ANY U.S. PRESIDENT”: (Mark Knoller, “National debt has increased $4 trillion under Obama,” CBS News’ Political Hotsheet Blog, 8/22/2011)

NATIONAL DEBT STANDS AT $15.57 TRILLION, LARGER THAN THE NATION’S $15.32 TRILLION ECONOMY: (“The Daily History of the Debt Results,”TreasuryDirect.Gov, Accessed 3/19/2012; “National Economic Accounts,” Bureau of Economic Analysis, Accessed 3/19/2012)

“CBO: EXPLODING DEBT UNDER OBAMA POLICIES”: (David Rogers, “CBO: Exploding Debt Under Obama Policies,” Politico, 3/16/2012)

RESEARCH SUGGESTS GROWING DEBT A MAJOR THREAT TO ECONOMIC GROWTH:

“ECONOMIC DAMAGE BEGINS TO RISE” WHEN PUBLIC DEBT HITS 90% OF GDP: “Economists believe that when debt to GDP reaches 90% or so, the economic damage begins to rise. And this doesn’t include the debt that future taxpayers owe current and future retirees through the IOUs in the Social Security ‘trust fund.'” (Editorial, “The Amazing Obama Budget,” The Wall Street Journal, 2/14/2012)

STUDY SUGGESTS DEFICTS PUT A DRAG ON OUR ECONOMY: “The eventual effect of sustained fiscal imbalance is slower growth and greater risk of a fiscal crisis. Our estimates suggest that a 10-point increase in the debt/GDP ratio lowers growth four years later by 0.2 percentage point, and increases the probability of a debt crisis by 2.5% in the aftermath of a financial crisis like the recent one. (See No Rush for the Exit,” Global Economics Paper, No. 200, June 30, 2010 and “When One Crisis Leads to Another,” US Economics Analyst, 11/04, Jan. 28, 2011.) To avoid this, lawmakers must begin to identify deficit reduction strategies.

“Ultimately, what goes up must come down. In the case of the federal budget, this means that a deficit-financed boost to growth will eventually lead to a drag. While policymakers can try to smooth the transition by phasing in cuts and incorporating multi-year fiscal commitments, achieving a sustainable fiscal policy will inevitably be a painful but necessary process.“(Jan Hatzius and Alec Phillips, “Fiscal Restraint: A Question of When, Not If,” Goldman Sachs Global ECS U.S. Research, 3/2/2011)

MAJOR ECONOMIC STUDY FINDS GOVERNMENT DEBT ASSOCIATED WITHSLOWER ECONOMIC GROWTH: “The sharp run-up in public sector debt will likely prove one of the most enduring legacies of the 2007-2009 financial crises in the United States and elsewhere… Our main finding is that across both advanced countries and emerging markets, high debt/GDP levels (90 percent and above) are associated with notably lower growth outcomes… Seldom do countries simply ‘grow’ their way out of deep debt.” (Carmen M. Reinhart and Kenneth S. Rogoff, “Growth in a Time of Debt,” American Economic Review Papers and Proceedings, 12/31/2009)