Apparently, the Democrats are putting the finishing touches on their first budget proposal in over two years. And … well, it was not worth the wait:
Senate Democrats have drafted a sweeping debt-reduction plan that would slice $4 trillion from projected borrowing over the next decade without touching the expensive health and retirement programs targeted by President Obama.
Instead, Senate Democrats are proposing to stabilize borrowing through sharp cuts at the Pentagon and other government agencies, as well as $2 trillion in new taxes, primarily on families earning more than $1 million year, according to a copy of the plan obtained by The Washington Post.
With debt-reduction talks under way between Obama and congressional leaders, Senate Democrats are unlikely to adopt the blueprint. However, it has gained broad support among those eager to chart a path to solving the nation’s budget problems without making politically painful cuts to Social Security and Medicare.
A few random points. First, canceling only the Bush tax cuts would raise taxes by $700 billion or so. If the Democrats want to raise taxes by $2 trillion, that means HUGE increase in marginal rates. They project a top rate of 39.6%. They are also targeting offshore tax shelters, which is Democratspeak for instituting double taxation on foreign earnings for American companies.
Second, I smell a rat on the budget numbers. If they are not touching entitlements, that means they reduce the deficit over the next ten years but blow it up in the out years. This is exact opposite of what Ryan’s plan does, which is to tolerate more mid-range debt in return for more long-range fixes.
Third, their spending cuts are small. $350 billion for non-defense spending, $900 in in defense. But they are counting $600 billion in reduced interest.
In the end, this is not a serious plan. The President is negotiating with the Republicans from their blueprint, not the other way around. This is mainly a bone to Democrat special interests. But at least we now know where their priorities are.