WASHINGTON – House Budget Committee Chairman John Spratt (D-SC) issued the following statement on the President’s Fiscal Year 2008 budget.

“While the President has endorsed the goal of balancing the budget, under realistic assumptions his budget remains in deficit every year.  The deficit for fiscal 2006 was $248 billion, and deficits will hover in roughly that range over 2007, 2008, and 2009.  When the surplus in Social Security is excluded, as it should be, on-budget deficits over those three years will exceed $400 billion.

“The President calls for nearly $2 trillion in tax cuts, so in the name of balancing the budget by 2012, he hits domestic priorities such as health care, education, and the environment.  The President’s budget calls for $252 billion in Medicare cost reduction over 10 years without reinvesting those savings in Medicare program improvements, plus $28 billion in net legislated Medicaid cost reductions; and provides less than needed to renew the Children’s Health Insurance Program so that it continues to insure the number of kids now covered.

“Appropriations for the budget function for education are cut more deeply for each of the next three years, cutting 2010 funding by $3.1 billion below the 2006 enacted level.  Pell Grants are increased but at the cost of recalling all Perkins Loan funds and eliminating nine other higher education assistance programs.  Funding for the President’s signature program, No Child Left Behind, which is up for renewal, would remain about $15 billion below the level promised when the bill was signed into law.

“The President’s budget assumes that the robust revenue increases of the last two years will keep coming, averaging 7.0 percent annually for the next five years, well above the 5.8 percent rate predicted by the Congressional Budget Office (CBO).  While CBO says that extending the 2001 and 2003 tax cuts would cause average annual revenue growth to drop to just 3.8 percent, the Administration claims revenue growth would still average 5.6 percent.  This difference means that the Administration claims that there will be $157 billion more in revenues in 2012 than CBO says will be the case if the tax cuts are extended.  The President’s budget also includes fees similar to what have been proposed in the past and rejected by Congress, such as fees for veterans’ enrollment and food inspection.

“The President’s budget is notable also for what it does not include, such as a permanent fix for the alternative minimum tax (AMT). If not fixed, by 2007, 23 million taxpayers will pay AMT rates and revenues will be $1.0 trillion higher over the next ten years. The President’s budget would patch the AMT for 2008, but leave it fully in force over the remaining four years, substantially overstating revenues.

“On the spending side, the President’s budget assumes that the cost of the military operations in Iraq and Afghanistan will drop to $50 billion in 2009, after budgeting $145 billion for 2008. No additional cost is budgeted after 2009.

“Once again, the President tags on to his budget a proposal for Social Security privatization, to take effect in 2012. The first-year impact on the budget is $29.3 billion, but the cost from 2012 through 2017 is $637.4 billion.

“President Bush came to the White House in 2001 with an advantage no president in recent times has enjoyed, a budget in surplus by $236 billion the year before he took office. Within two years, that surplus was gone, and the United States began accumulating a mountain of national debt, adding up to a total of over $3 trillion. The statutory debt ceiling was last raised by $781 billion to $9.0 trillion in March of 2006. Even if the President’s budget were to pass, this hike in the debt ceiling will be sufficient for less than two years, and the debt ceiling will have to be raised again by the end of this year.

“I doubt that Democrats will support this budget, and frankly, I will be surprised if Republicans rally around it either.”

# # #