I read a very interesting post from the Eisenthal Report dealing with the recent Concord Coalition budget analysis of President Bush’s budget submission. The numbers cited are staggering. Read the Eisenthal posting here. David has done a superb job of summarizing some of the salient financial points involved in the report, and his posting is worth a good hard look. I realize that many have become numb to the warnings of budgetary doom that always seem to be out there, but I truly believe that the course we are charting is simply unsustainable. The Concord Coalition report highlights some of the obvious problems underpinning the Bush Administration budget assumptions, and deals with the long term effects of no change in fiscal policy. That brings me to the continued fighting over the Alternative Minimum Tax, and the concept of “pay-go”. The Alternative Minimum Tax, originally designed to snare millionaires who were totally avoiding federal tax liability, is begining to ensnare millions of people who it was not designed to hit. (No provisions were made originally to index for inflation)From todays Washington Post:

House Democrats want to use a parliamentary maneuver to push a $70 billion tax increase through a reluctant Senate, a move intended to spare millions of taxpayers from an unpopular tax without driving up the deficit.

Under the plan, the House would prevent the alternative minimum tax from expanding to include more than 20 million additional households at tax time in April 2009, a change that would ordinarily deprive the Treasury of billions of dollars. To cover the cost, House tax-writers said they would come up with a proposal to raise the money elsewhere. That bill would be sent to the Senate in a fast-track package that would need only a simple majority to pass, denying Republicans and conservative Democrats the chance to filibuster.

And while Democrats take the fiscally sound position of reforming the ATM while not increasing the federal deficit the Republicans balk.

Senate Republicans and White House officials assailed the newest proposal. “The administration does not believe the appropriate way to protect 22 million additional taxpayers from [the AMT] is to impose a tax increase on other taxpayers,” said Christin Baker, a spokeswoman for the White House budget office. Sen. Judd Gregg (N.H.), the senior Republican on the Senate Budget Committee, accused House leaders of “doing the Senate’s dirty work.”

The Republicans notion of reform in this case is to modify the ATM and simply add billions to the federal deficit. They decry pay-go as the Democratic way of passing automatic tax increases. But pay-go doesn’t mandate tax increases to make up for revenue loss. It simply says that the revenue loss or spending increases must be balanced out. (Increased spending would require increased revenue to pay for it-Tax cuts would require spending cuts or other revenue enhancements). The problem here is that neither party wants to give an inch on their political agenda, and that refusal to face reality leads to the type of numbers cited by the Concord Coalition. It is time for a reality check before it is to late. If spending is worthwhile then we must raise revenue to pay for it. If it is not or if the feeling is that it is unaffordable we must cut the spending. Republicans need to come clean about what areas of spending they really want to cut, and Democrats need to articulate how much revenue they really need to balance our budget and straighten out the entitlement mess and highlight areas in the federal budget that they would cut. Both parties will need to tell their base things that they will not want to hear. That is my spending rant for today. Read the Washington Post AMT story here.

Read the Concord Coalition report here.