Chairman's Mark Reduces Deficit More Than President's Budget
Yesterday the Senate Budget Committee chairman Kent Conrad (D-ND) released some highlights of his FY2011 budget blueprint, or Chairman's Mark, followed last night by the release of the full mark. This marks the beginning of the Senate Budget Committee's work to bring a budget to the Senate floor in the coming weeks. The question of whether to even develop a budget has wracked congressional Democrats over the past few weeks, given many lawmakers’ unease of endorsing large deficits on one hand or facing tough choices on the other hand. CRFB congratulates the Senate for working on a budget, and encourages the House to follow suit.
The Chairman's Mark reduces the deficit by $671 billion more than under the President's budget over the next five years, bringing the deficit down to 3 percent of GDP by 2015. This cuts about $200 billion from the 2015 deficit alone, compared to the President’s budget.
It does so by assuming Congress will fully pay for AMT patches and an estate tax fix after two years. This is both responsible in so far as Chairman Conrad and some fiscally inclined members would truly like to offset the costs of these policies, and wishful thinking in that most of them are unwilling to. Ever hopeful – we believe that offsetting these costs would be very helpful in moving towards a reasonable goal. However, history suggests that lawmakers will continue patching these pieces of the tax code whether or not they can find offsets.
Absent such off sets, the deficit could be $80 billion or so higher in 2015, and reach 3.4 percent of GDP.
(Notice how current law is the best of all scenarios? Not surprisingly, not extending expiring tax cuts and spending increases without paying for them is a pretty good way to decrease deficits!)
But the Chairman's Mark doesn't cut the deficit through these assumptions alone. It also embraces the President's three year non-security discretionary spending freeze, spends less on Pell Grants, cuts foreign aid spending, and pares back many of the tax breaks in the President's budget (including by extending fewer of the 2001/2003 tax cuts). In addition, the resolution requires that all savings from the deficit commission's recommendations and from reducing improper payments be used for deficit reduction -- not to offset other spending.
The table below displays revenue changes in the Chairman's Mark vs. revenue changes in the President's budget, over five years.
||Chairman's Mark 2011-2015||President's Budget 2011-2015|
|Middle-class tax relief||-$619 billion*||-$952 billion*|
|AMT relief||-$131 billion||-$221 billion|
|Estate tax reform||-$14 billion||-$87 billion|
|Other relief for individuals, families||-$34 billion||-$66 billion|
|Extenders and business provisions||-$96 billion||-$78 billion|
|Subtotal, tax relief||-$894 billion||-$1,300 billion|
|Loophole closers and other raisers||$114 billion||$216 billion|
|Total, tax provisions||-$780 billion||-$1,084 billion|
*These figures include the cumulative effects of the middle-class tax cuts on both revenues and outlays through refundable portions of the tax credits.
CRFB will continue to provide further analysis as the resolution moves through the budget process.