As the 2005 budget resolutions process gets on its way, spending for domestic programs could actually come out lower than the already grim projections set by President Bush’s budget proposal. Given that it is an election year both the president and Congress’ use of "spin" and shenanigans to mislead the American public will proceed. A big election year issue is budget deficits and the skyrocketing national debt – peaking now at $7 trillion.

In his budget, Bush proposed cutting the deficit in half in five years by limiting all non-defense, non-domestic security discretionary spending (most of what government does outside of entitlements like Social Security) to a 0.5 percent increase (less than the cost of inflation) in fiscal year 2005. In addition, the Bush budget proposes to send 63 federal programs to the chopping block and make big cuts in another 65. Cuts to domestic discretionary spending, except for homeland security, are scheduled to continue throughout 2009 and beyond. Even with this radical proposal to shrink government, many experts think that the goal of cutting the deficit in half in five years is highly unlikely.

While Democrats have been busy pointing out the myriad of ways the Bush budget shortchanges ordinary Americans, conservative Republicans are searching for ways to further reduce spending. Some "deficit hawk" Republicans want to balance the budget in five years, by cutting all discretionary spending, including defense and homeland security, by 1 percent each year. This idea follows a plan developed by Stephen Moore, the President of the Club for Growth, a member based organization that “helps select candidates who support the Reagan vision of limited government and lower taxes.” Others want to reduce domestic discretionary spending by 1 percent, but keep the exemptions for defense and homeland security.

The Bush budget was largely construed to hide the huge costs of his tax cuts by painting a rosy picture that favored making the cuts permanent after 5 years. It appears from recent news reports about the preliminary congressional leadership wheeling and dealing in preparation for the budget resolution that the resolution itself may also be limited to five years rather than the usual ten-year span. There is a good reason for this. As many of you will remember during the 2003 tax cut effort, tax cuts are much easier to pass when they are made a part of the "reconciliation" process in the budget resolution. Under Senate rules, tax cuts outside the budget resolution require 60 votes to pass if a point of order is raised. The tax cuts that do not expire until 2010 like the repeal of the estate tax, which only benefits multi-millionaires, or the higher marginal rate reductions, also benefiting wealthier Americans, will be outside of the 5-year window and would then require 60 votes and be unlikely to pass. If those cuts were included in a 10-year budget resolution, the massive 10-year deficits, estimated at $990 billion by the Treasury Department, would also be hard to cover up.

It appears that Congress is going to quietly ignore Bush's call to make all the expiring tax cuts permanent. Their five-year strategy may be to include the extension of tax cuts that expire December 31, 2003, like the marriage "penalty" relief, the child credit, and the expanded 10 percent tax bracket. These tax cuts are perceived to benefit low- and middle-income people. This will put Democrats in a difficult position. Democrats will either provide the 60 votes to make the tax cuts permanent or be the party that wants to raise taxes on low- and middle-income Americans. And, since the cost of making the tax cuts permanent will require cuts in spending, Democrats will be stuck with making cuts to domestic programs because of their vote for the tax cuts. This plan would also get Republicans off the sharp hook of passing a ten-year budget resolution that either extends the tax cuts that expire at the end of 2010 and therefore massively increase the deficit, or defies Bush by allowing the tax cuts to sunset. One sour note for Republicans is what to do with the 2003 reductions in capital gains and dividends – hardly able to be spun as a “benefit to ordinary Americans” - that expire in 2008. They can perhaps be characterized as benefiting the economy, given a liberal dose of spin.

No one wants their federal income taxes raised, but many ordinary Americans will be paying more - through cuts in services, increases in fees, and higher state and local taxes made because of the effect on states and localities of federal tax and budget policy. These are the real increased costs for low- and middle-income Americans. The simple fact is that the radical efforts to shrink government by reducing federal revenue will have a far more negative effect on the lives of most of us than fair, simple, reasonable and progressive taxes ever could. As the budget battles unfold during the coming months, the price that must be paid to reduce government, by paying fewer taxes, should not be ignored.