The budget resolution approved last week by the Senate Budget Committee has nothing good to recommend it. It will hand more tax breaks to the extremely wealthy while slashing assistance to low-income working families and children. Funds for education, housing, the environment and a host of other services that benefit ordinary Americans will also be cut. Ironically, in spite of all these cuts, the committee?s resolution will increase -- not reduce -- the deficit.

This budget resolution, which will be up for debate on the Senate floor this week, will:

• Slash domestic appropriations for almost everything government does outside of entitlements, homeland security and military funding. Only funds for space exploration and Homeland Security will be significantly increased. These cuts will really balloon in 2006, but appear to be less severe during the 2005 election year.
• Cut billions from "entitlement" spending targeting Medicaid and Earned Income Tax Credit (EITC) programs that primarily benefits low-income children and families.
• Accelerate the repeal of the estate tax for one year, a windfall for those who have estates valued at over $3.5 million, and extend for five years the temporary tax cuts for capital gains and dividend rates.

While the budget for fiscal year 2005 is bad, the next five years covered by the budget resolution will get much worse. If this five year budget is adopted, funding for domestic appropriations programs outside of homeland security would be cut a total of $113 billion over five years according to an estimate by the Center on Budget and Policy Priorities. Some of the main provisions from the Senate Budget Committee?s proposed budget resolution are:

• Budget caps for fiscal years 2005 and 2006. The $814 billion cap for 2005 is $9 billion lower than the president's request, and will cut or freeze most domestic appropriations at FY 2004 levels of spending. Since the caps will cover both domestic and military spending, increases in military spending will crunch domestic spending even more. Budget caps cannot be exceeded without 60 votes in the Senate.
• Required reductions in "mandatory" or "entitlement" spending. Proposed cuts include a $3 billion reduction in the EITC for low-income working families. Possibilities include eliminating the EITC for working families without children; raising taxes for 3.1 million low-income taxpayers; or delaying refunds to eligible families for up to a year. Other cuts that are on the table include an $11 billion reduction in Medicaid, paying no regard to the forty-three million Americans who are already without health insurance. These cuts will increase the number of the uninsured, and swell state fiscal crises because it will cause a decrease in the federal share of Medicaid costs.
• Tax cuts in the amount of $80.6 billion that are exempt from Senate filibuster or 60-vote requirements. These cuts are intended to extend for five years past their 2005 expiration date, and include: the marriage "penalty," the child credit, and the 10 percent tax bracket. Lest multimillionaires with over $3.5 million in assets feel left out of these "middle-income" tax cuts, the 2010 repeal of the estate tax will be accelerated to 2009. In actuality, the $80.6 billion worth of tax cuts only specifies the total amount of cuts that are protected from dissent, leaving the possibility of even more tax cuts for the wealthy.
• Tax cuts that are subject to Senate filibuster and a 60-vote requirement include another temporary one-year fix to the Alternative Minimum Tax, and a five-year extension of the cuts in capital gains and dividend rates. The total amount, including the protected $80.6 billion, set aside for taxes in the budget is $164 billion over 5 years, minus the$20 billion in offsets that the Senate must find.
• Continuation of the Senate pay-go rules that require an offset for entitlement spending increases or tax cuts. The catch is that these rules only apply to spending or tax cuts not included in this year?s resolution. For example, the estate tax repeal acceleration does not have to be paid for by an offset.

The effort to balance the budget by cutting spending for the kind of priorities ordinary Americans value -- education for their kids, clean water and air, and the opportunities for every American to succeed -- while simultaneously insuring that the Bush tax cuts are made permanent (at a cost of $2 trillion over the next ten years) means that the deficit will continue to rise. The cuts that will negatively affect millions of middle-income and low-income Americans will only partially offset the cost of the tax cuts, not reduce the deficit. In anticipation of continued deficits, the budget also includes an increase in the national debt ceiling from $7.4 trillion to $8 trillion. Coincidently, this ensures a level debt limit for the year, with no significant raise, as we get closer to Election Day.

The budget is being debated on the Senate floor during the week of March 8. According to reports on March 9, a bipartisan amendment may be offered to remove the reconciliation instructions for the $80.6 billion in tax cuts (which would be exempt from filibuster or the 60-vote requirements). This would make it more difficult to accomplish the proposed acceleration of the estate tax (or other tax cuts benefitting wealthier taxpayers that might be attempted).

The House Budget Committee is expected to markup its budget on March 10, with floor debate during the week of March 15. The House budget is widely expected to have even more draconian cuts than the Senate budget. In order to have a binding budget, the Senate and House versions must be reconciled and the final version approved by both chambers.