Doyle E-Newsletter Number 9

April 7, 2005

Dear Friend,

The annual federal budget is the clearest single statement about our government’s priorities. The U.S. House of Representatives recently conducted a lengthy debate about those priorities.

The House debated three different visions for the federal budget – the budget resolution supported by the House Republican leadership and two substitute amendments offered by House Democrats. After much debate, both amendments offered by House Democrats were defeated and the original resolution was passed and sent to the Senate for its consideration.

The Republican House Leadership Budget

The budget resolution supported by most Republicans didn’t reflect my priorities, and as a result I voted against it when it was approved by the House on a vote of 218 to 214. It’s both fiscally irresponsible and morally irresponsible. It cuts important federal programs while providing additional tax cuts for the wealthy that we can’t afford – and running massive deficits that would hurt everyone in the long run.

The Republican budget would provide $843 billion for “discretionary spending” in fiscal year 2006. “Discretionary spending” is all federal spending that is not “mandatory” spending like interest payments on the national debt and entitlement programs like Social Security and Medicare. This budget would increase defense spending by $70 billion (of which $50 billion is funding for our troops in Iraq and Afghanistan) and cut non-defense discretionary spending by $4 billion – which is $12 billion less than would be needed to provide the same services the federal government is providing this year. These cuts, which will be decided later in the year, would fall on a number federal programs, most likely including education, veterans’ health care, homeland security, community development, and law enforcement. Over the next five years, this budget would cut non-defense discretionary spending by a total of $150 billion. By 2010, that would result in a $47 billion (or more than a 10 percent) cut in these programs.

Federal spending on education, health care, and other social services for the poor and disabled are already grossly inadequate. Under this budget, this problem would get increasingly worse.

This budget would cut $2.5 billion in federal education programs in 2006, for example, and $38 billion in those programs over the next five years.

It would also cut federal community and regional development programs by $8 billion (over 30 percent) over the next 5 years. That would be disastrous for communities in Allegheny County, which currently receive over $40 million a year in Community Development Block Grant funds alone.

Finally, this budget would cut veterans’ health care by $14 billion below current services over the next five years – and require $800 million in either new fees for veterans health care or in cuts in disability pay, pension benefits, or veterans’ education benefits.

This budget would also require $8 billion in cuts in mandatory programs in 2006 and a total of $69 billion in cuts in mandatory programs over the next 5 years. Of those cuts, $21 billion would come from the programs under the jurisdiction of the Education and Workforce Committee – which means that they would have to come from child nutrition programs, student loans, vocational rehabilitation programs, or pension and disability programs. Another $15 billion to $20 billion would come from cuts in Medicaid, the federal-state program that provides medical care for the poor and the disabled. The budget approved by the House also called for $19 billion in cuts over the next five years in programs within the jurisdiction of the House Ways and Means Committee. Programs likely to go under the knife there include the Earned Income Tax Credit, the Child Tax Credit, unemployment benefits, Supplemental Security Income benefits for low-income seniors and the disabled, the Temporary Assistance for Needy Families program, and foster care.

In addition, at a time of record deficits, the Republican budget resolution would cut taxes dramatically – by $100 billion over 5 years and by $1.6 trillion over the next ten years. Most of these tax cuts would go to the most affluent Americans – those with incomes of $300,000 or more a year.

If Congress adopts this budget and makes the tax cuts from President Bush’s first term permanent (which would increase federal deficits by between 1 and 2 trillion dollars over the next ten years alone) and we continue to spend a billion and a half dollars a week in Iraq and Afghanistan, we won’t be able to avoid making dramatic cuts in every major federal domestic activity in the next few years.

Moreover, instead of balancing the federal budget, this budget would increase federal deficits by $127 billion over the next 5 years and produce massive deficits for years to come. In fact, it would never bring the federal budget into balance. This failure to address the deficit in the coming years will add a trillion dollars to the national debt over the next 10 years, increase federal interest payments by billions of dollars annually, and most likely boost interest rates on mortgages, auto loans, credit card balances, and student loans. Between this budget’s cuts in services and its massive deficits, this budget plan would place a heavy burden on lower- and middle-income families – all to provide additional tax cuts for the wealthiest Americans.

Finally, this budget was shamelessly deceptive. In a departure from past practice, it included federal budget projections for the next 5 years instead of the 10 year projections that have been provided in the past. This was clearly done for several reasons. First, it allowed the House Republicans to claim progress on deficit reduction by leaving out the years 2011 to 2015 – when deficits explode under their plan. Second, it hides the true cost to the public of making the President’s tax cuts permanent. While making those tax cuts permanent would increase deficits by “only” $106 billion over the next 5 years, it would add at least $2 trillion to the national debt over the next ten years (once the additional interest costs associated with the tax cut are counted). This is because most of these tax cuts don’t expire until 2011. Third, the budget resolution fails to address several major costs which the federal government will undoubtedly incur over the next 5 to 10 years. While the resolution included a one-year $31 billion “fix” for the Alternative Minimum Tax, for example, it ignored the costs of adjusting the alternative minimum tax for inflation in subsequent years ($200 billion over 5 years and $642 billion over 10 years). And while the Republican budget included $50 billion to cover some of the costs of the war in Iraq in 2006, those costs are expected to total $384 billion over the next ten years. And perhaps most significantly, while many House Republicans are calling for the adoption of President Bush’s Social Security privatization plan, their budget didn’t include any of the $754 billion in transition costs that this plan would incur over the next ten years (or the $5 trillion it would cost over the next 20 years).

For these reasons, I voted against this resolution and voted for each of the two Democratic substitutes described below.

The Watt Substitute

The Watt substitute would have produced lower deficits – $167 billion lower – over the next 5 years than the Republican budget, while spending significantly more on important federal domestic programs.

This substitute would have provided more than $24 billion more for education than the Republican budget resolution in 2006.

It would provide $1.5 billion more than the Republican budget for community and regional development in 2006.

The Watt substitute would provide $4.65 billion more than the Republican budget for veterans’ programs in 2006, and it would have rejected the $800 million in increased fees and benefit cuts called for in the Republican budget.

The Watt substitute would maintain the current federal level of financial commitment to the Medicaid program, which provides desperately needed health care to more than 52 million low-income and disabled people.

The Watt substitute would also have rejected the Republican budget’s $19 billion in cuts in mandatory programs for the poor within the jurisdiction of the House Ways and Means Committee.

The Watt substitute would have reduced spending on ballistic missile defense (“Star Wars”) by $7.8 billion and used that funding to increase spending on homeland security, our troops in Iraq, and programs for our veterans.

Finally, the Watt substitute would have rejected the tax cuts in the Republican budget. In fact, it would have rolled back the Bush tax cuts for households with incomes of more than $200,000 a year and eliminated several abusive tax loopholes in order to reduce the deficit and maintain or increase spending for important domestic programs. These two changes would have improved the federal budget outlook by $35 billion in fiscal year 2006 and by $169 billion over the next 5 years.

I voted in support of the Watt substitute, which reflected priorities much closer to my own than the Republican Leadership’s budget. Unfortunately, the Watt amendment was rejected on a vote of 292 to 134.

The Democratic Substitute Budget

Representative John Spratt, the Ranking Democratic Member of the House Budget Committee, offered a substitute budget that I believe also had much better priorities than the Republican budget. The Spratt substitute balanced fiscal responsibility with the necessary levels of spending on federal responsibilities like defense, homeland security, education, veterans’ health care, and law enforcement.

This Democratic substitute would have balanced the federal budget within the next 7 years. It would have increased our public debt by $182 billion less than the Republican budget over the next five years.

This substitute would have provided more than $4.5 billion more for education than the Republican budget resolution in 2006 and $41 billion for over the next 5 years. It would have increased the maximum Pell Grant by $100 per year for the next 10 years – twice the amount by which the Republican budget would increase it – and (unlike the Republican budget) it wouldn’t have cut other college aid programs to pay for it.

It would have provided $2 billion more than the Republican budget for community and regional development in 2006 and $9 billion more over the next 5 years.

This substitute would have provided $1.6 billion more than the Republican budget for veterans’ health care in 2006 and $17 billion more over the next 5 years. It would also have rejected the $800 million in increased fees and benefit cuts called for in the Republican budget.

The Democratic substitute would have maintained the current federal level of financial commitment to the Medicaid program.

The Spratt substitute would also have rejected the Republican budget’s $19 billion in cuts in mandatory programs for the poor within the jurisdiction of the House Ways and Means Committee.

The Democratic substitute would even have provided tax relief to the households that need it most. It would have extended expiring tax cuts for middle-class families – like the child tax credit and marriage penalty relief – while preserving spending on critical federal domestic programs and balancing the budget.

In addition, the Democratic substitute would have re-imposed the federal “pay-as-you-go” budget rules that expired several years ago. Those rules required that any future tax cuts or spending increases be offset by other tax increases or spending cuts. Those “PAYGO” rules were widely given much of the credit for the budget surpluses that Congress achieved in the 1990s.

Finally, unlike the Republican budget, the Democratic substitute showed all of its tax and spending projections for the next ten years. This made the priorities and trade-offs inherent in this budget much clearer and allowed the public to better evaluate those priorities and trade-offs.

I voted in support of this amendment, which reflected much better priorities than the Republican Leadership budget. Unfortunately, this substitute was rejected on a vote of 264 to 165.

Summary

With the House’s rejection of the Spratt and Watt substitutes and its adoption of the House Republican leadership’s budget, the impact that the federal budget will have in fiscal year 2006 is getting clearer and clearer. Unless something unexpected happens, Congress is very likely to adopt a budget that cuts taxes and domestic programs substantially while continuing to run massive annual deficits as far as the eye can see.

Such policies would clearly be unsustainable, and they would result in economic disaster for this country – and for the majority of Americans.
The massive annual deficits that we’re producing by refusing to pay for the services the federal government provides will impose a dreadfully heavy burden on future generations.

The Senate recently passed its own version of the budget, and now appointees from the House and Senate are working to resolve the differences between the two resolutions. Once such a “conference agreement” is reached, each body must vote to adopt it before it becomes binding. Congress is required by law to complete work on the fiscal year 2006 budget by April 15.

It is my sincere hope that Congress will reverse course and adopt a budget that makes its top priorities fiscal responsibility and meeting the needs of low- and middle-income Americans. I will continue to work in the coming weeks (and possibly months!) to achieve those goals.

It continues to be a pleasure to serve you, and I look forward to hearing from you. Please feel free to e-mail me at Rep.Doyle@mail.house.gov to share your thoughts with me or to request assistance in dealing with the federal government – or, if you prefer, you can use my web site, www.house.gov/doyle.

Until next time, I am

Sincerely,

Mike Doyle

Member of Congress