The voices of Tax Policy Center's researchers and staff
The Administration released its FY2009 budget today. To save paper, OMB limited the number of printed copies, but Senate Budget Committee chairman, Kent Conrad (D-ND) couldn't resist quipping that the Administration "ran out of red ink."
For tax geeks, the best parts are not in the main budget, but in the Analytical Perspectives volume, which contains a chapter on tax expenditures, and the Treasury Blue Book, which has detailed descriptions and revenue estimates for the Administration's tax proposals.
Following the green theme, this year's tax proposals appear to be almost entirely recycled. The price tag is much larger than last year, however—almost $2.6 trillion over the budget period including the costs of fiscal stimulus in 2008, but excluding the cost of a permanent AMT fix, which would raise the total to around $4 trillion. The additional interest on the national debt from extending the Bush tax cuts and fixing the AMT would add another $700 billion or so. As the late Senator Dirksen might say, a trillion here, a trillion there, pretty soon you're talking real money.
The cost rose from about $2 trillion in the FY08 budget primarily because of the fiscal stimulus package and the extra year of extending the Bush tax cuts. The Administration also projects more robust economic growth, which makes the tax cuts cost more. But the $15,000 standard deduction for health insurance—first proposed last year—is now projected to raise taxes during the budget period because it's indexed to overall price levels, which grow much slower than health insurance premiums (so the standard deduction turns from a tax cut in the early years to a large and growing tax increase over time). (See our analysis of the plan here. I thought that the president might adopt TPC's recommendation of making the credit refundable so it would help low-income people, but he decided to stand pat.)
The OMB website trumpets the fact that this year's budget documents are now digitally signed and authenticated. The GPO eagle logo (I didn’t know there was a GPO eagle) now says, "Authenticated U.S. government information."
But the numbers inside are as credulous as ever. A balanced budget in 2012, for example, arises from the assumption that spending on both security and non-security purposes will be lower in nominal terms in 2013 than in 2008, and that almost 40 million AMT taxpayers will swell tax coffers.
So maybe this budget isn't green after all, but rose, as in "Rosy Scenario."
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