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POLICY INSIGHT
BEYOND THE NUMBERS

Boehner “Compromise” Budget Proposal Is Anything But

We issued an analysis this morning of House Minority Leader John Boehner’s proposal to cut funding for discretionary (i.e., annually appropriated) programs other than defense, homeland security, and veterans and to extend all of President Bush’s tax cuts for two years, including those for the wealthiest Americans.  Here are the highlights:
  • The plan would require the largest domestic funding cuts in recent U.S. history. Rep. Boehner’s proposed funding level for these programs is 22 percent below the fiscal year 2010 level adjusted for inflation (the latter of which is roughly the level President Obama has proposed).  Coming amidst the deepest economic downturn since the Depression, these cuts would remove substantial purchasing power from the U.S. economy and thereby cost hundreds of thousands of jobs while heightening the risk of a double-dip recession.These cuts would also have sharp effects on basic services.  For example, a 22 percent cut in K-12 education funding would take nearly $9 billion out of this area in fiscal year 2011, on top of the deep education cuts that many state and local governments across the country are being forced to make because of their own budget problems.
  • Rep. Boehner’s claims that his proposal would freeze non-security discretionary funding at the 2008 level and that such funding has increased 85 percent since then are incorrect. His proposed funding level actually is $44 billion below the 2008 level ($22 billion below it if you don’t count emergency funding Congress approved in 2008).  And the funding increase between 2008 and 2010 — excluding emergency funding in both years — is not 85 percent but 15 percent, after adjusting for inflation, a reasonable amount given the severe weakness in the economy and the accompanying drop in consumer, business, and state and local government purchases.
  • While Rep. Boehner has equated his proposed tax-cut extension with a recent proposal from former OMB director Peter Orszag, the two differ in a critical respect. Orszag called for extending the “middle-class” tax cuts (and, if politically necessary, the high-income tax cuts as well) for two years and then terminating all of them; he envisions a commitment by key policymakers that, in extending the tax cuts now, they will allow them to end after 2012.  In contrast, Rep. Boehner has made clear he still wants all of the tax cuts made permanent. Rep. Boehner’s proposal is a rather transparent effort to extend the tax cuts into the next Congress when those who seek to make them permanent will have more votes.  It would entail continuing tax cuts that average well over $100,000 a year — double the entire income of the typical American household — for people making over $1 million while cutting basic programs and services that most Americans of ordinary means rely on.