PRESS RELEASE
--For Immediate Release--
February 5, 2007

Contact: Brian Gumm, (202) 234-8494, bgumm@ombwatch.org

Bush Budget Full of Unrealistic Assumptions & Misplaced Priorities

WASHINGTON, Feb. 5, 2007—OMB Watch today issued an analysis of President George W. Bush's Fiscal Year 2008 budget request. The analysis shows that the president's budget continues his longstanding efforts to divert resources away from needed domestic investment and reinforces doubts that the president's promise to balance the federal budget by 2012 is plausible.

"The budget President Bush delivered to the nation today is built on unrealistic assumptions and misplaced priorities," said Adam Hughes, Director of Federal Fiscal Policy at OMB Watch. "The president is attempting to balance the federal budget on the backs of regular Americans while continuing tax cut giveaways for the well-off."

Several proposals within the FY 08 budget request are particularly striking in their scope and implications.

• $60 Billion Tax Hike in the AMT — The budget assumes billions in increased revenues from the Alternative Minimum Tax (AMT) that are highly unlikely to materialize. In FY 08, the budget assumes a revenue loss of $47.9 billion due to passage of a "fix" or "patch" for the AMT. Yet the very next year, Bush projects the AMT will actually bring in an additional $11.4 billion essentially a tax increase that would get little traction in Congress.


• Radical Reduction of War Effort — The budget includes $149 billion for the wars in Iraq and Afghanistan, which is on top of a nearly $100 billion FY 07 supplemental war funding request also released today. But Bush only requests $50 billion for the wars in FY 09 and zeroes out war funding in FY 2010-2012, numbers that are wholly unrealistic unless major changes are planned for the wars after FY 08.


• Deep Cuts in Entitlement Spending, Particularly Medicare and Medicaid — The budget proposes nearly $100 billion in cuts to Medicare and Medicaid over the next five years through legislative and regulatory changes in the programs, which will leave more Americans without adequate health care coverage. It also cuts Food Stamp eligibility and would drastically reduce the number of children covered under the State Children's Health Insurance Program.


• Unprecedented Cuts to Discretionary Spending Hidden Under Budget Caps — Under the president's assumptions, non-defense programs — outside of homeland security — would be cut an incredible 23 percent between FY 2007 and FY 2012 when adjusted for inflation. This is even more drastic than previous budget requests from President Bush.

"The president claims that his budget moves the nation toward fiscal responsibility," said Hughes. "Unfortunately, on issues like the Alternative Minimum Tax and the war, the proposal is simply rhetoric designed to sustain the false promise of a budget surplus by 2012. It does nothing to prepare for a return to larger deficits beyond the next five years and even more troubling is the fact that the proposed budget continues to erode what remains of the nation's safety net during a time of rising needs."

Hughes added, "We urge Congress to reject the president's proposal and instead craft a plan that will actually put the country on a path toward addressing its fiscal problems and adequately funding investments in our communities."

Tomorrow, Tuesday, Feb. 6, OMB Watch will release several detailed fact sheets on specific issues within the FY 08 budget request.

A copy of today's analysis is available at /files/budget/fy08budgetanalysis.pdf.

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