Budget Background

On the day Paul Ryan released his budget, Chairman Murray released a summary document to media that claimed $1.85 trillion in deficit reduction, including $975 billion in spending cuts. Both of these claims are completely false and were proven to be so by the actual budget resolution Chairman Murray released later the next day. Yet Senate Democrats continued to make these same provably false claims throughout the mark-up, and they show no signs of stopping yet.

Senate Democrats’ claim of $1.85 trillion in deficit reduction is based on several egregious accounting gimmicks. The biggest is that the majority amazingly fails to account for the cost of eliminating the sequester—a $1.2 trillion sleight-of-hand. In other words, they don’t replace the sequester and then offer $1.85 trillion in deficit reduction; the $1.85 trillion is the sequester replacement—wiping out most of the alleged new savings.

Reports, therefore, that Democrats’ $1.85 trillion in deficit reduction can be in any way compared with Ryan’s $4.6 trillion (to balance the budget) are in dramatic error: Ryan’s $4.6 trillion is in addition to the spending cuts already enacted and in law. This is significant: Congress cut spending $2.1 trillion in exchange for a $2.1 trillion increase in the debt limit (the Budget Control Act). Any proposal to eliminate these cuts increases the deficit and increases spending, while replacing them honestly (i.e., with cuts of equal size) would be deficit neutral—but certainly not new savings.

The majority budget staff conceded under questioning during the budget mark-up that, once you account for the cost of eliminating previously enacted spending cuts, the budget reduces the deficit by only $700 billion. But this too is inflated because it relies on other baseline gimmicks. Once this is adjusted for, the true deficit savings over 10 years are only $300 billion—a far cry from the $1.85 trillion that has been publicly touted.

The impact this has on the spending side is significant. The $975 billion in spending cuts are wiped out by the wholesale elimination of the sequester. Even if one gives Senate Democrats credit for other nominal spending cuts in their budget plan, the net result is still a spending increase.

What does all this mean at bottom? First, the majority’s own staff effectively conceded that their deficit reduction claims are phony, and the true figure is about $300 billion over 10 years rather than $1.85 trillion. Second, as the Associated Press reports, the Senate Democrat budget “increases spending,” including a net spending increase of $162 billion next year. Most troublingly, the plan makes no alteration to our dangerous debt course, and actually adds $7.3 trillion to the debt over the next decade. It is a national tragedy. These failures explain why the majority so fiercely resisted producing a plan and so drastically misrepresented it when they ultimately brought it forward. The budget cannot be defended on the merits.