In routine party-line votes last week, both houses of Congress completed action on a Democratic-crafted budget containing the biggest tax increase in U.S. history. That this was overlooked attests to the legerdemain of Sen. Kent Conrad of Bismarck, N.D., chairman of the Senate Budget Committee.
Conrad, a 59-year-old third-termer, is a monotone orator whose use of statistical charts betrays his dozen years as a North Dakota state tax collector. He seems so straight an arrow that it is hard to accuse him of the big lie. But that is precisely what he has done.
Conrad has repeatedly insisted his budget contains no higher taxes. But how, then, can it increase discretionary spending $200 billion over five years, while promising immense budget surpluses in the future? By raising taxes not only on upper-bracket income earners but also on dividends and capital gains, affecting many more Americans.
Conrad has been in denial. After I described his budget as an old-fashioned Democratic tax-and-spend formula on March 28, Conrad wrote a letter to newspapers accusing me of "blind ideology and meaningless partisan rhetoric." His budget, he said, "neither assumes nor requires a tax increase." That is exactly what he has been saying for months on the Senate floor.
A typical exchange occurred May 9, when Republican Sen. John Thune displayed spend-and-tax charts. "Not true," responded Conrad. "There is no tax increase in the proposal before us." In the final debate last Thursday, Conrad again contradicted the assertions of higher taxes by his Republican counterpart on the Budget Committee, Sen. Judd Gregg.
Different in kind from normal congressional debate, this is based not on the merits of higher taxes but disagreement on the existence of any increase. The mystery is easily solved. Under the Democratic budget, the Bush administration’s tax cuts are permitted to expire at the end of 2010. That means higher taxes if Congress does nothing.
Conrad has defended his no-tax-increase claim on grounds that the Democratic budget’s five-year revenues total $14.827 trillion, compared with a "virtually identical" $14.826 trillion in President Bush’s budget. But he is comparing apples and oranges — calculations by the Congressional Budget Office and by the Office of Management and Budget using varying techniques and economic assumptions. That they are so close to each other was an accident.
After months of Conrad’s assurances that his budget contained no tax increases, the Senate adopted, 97 to one, an amendment by Finance Committee Chairman Max Baucus that decreased estimated revenues by $195 billion. It would save the child tax credit, marriage penalty relief, estate tax decreases and other expiring tax proposals. If the budget "does not raise taxes," asked Rep. Paul Ryan, ranking Republican on the House Budget Committee, on May 10, "why has there been a discussion about whether or not to adopt the Baucus amendment?" It survived in the final version of the resolution.
Conrad’s insistence has affected the way the budget resolution has been reported. The Associated Press account never mentions tax increases. The Wall Street Journal’s headline cautiously refers to a "partial lapse of tax cuts."
Conrad’s fellow Democrats in the Senate buy into his euphemisms. Not a single Democratic senator voted against the tax-increasing budget — not even Nebraska’s Ben Nelson, who often departs from the party line and who supported the Bush tax cuts.
But the budget resolution’s tax increases sounded a warning signal for the House, which passed it by only 214 to 209. Until now, the new Democratic majority in the House has been solid amid substantial Republican defections. But no Republican member voted for the budget, while 13 Democrats opposed it. Of the defectors, left-wing Rep. Dennis Kucinich voted no because he said the budget would fund President Bush’s Iraqi war effort throughout his term.
The other 12 were moderates, including six freshmen who defeated Republicans last year. One freshman was Rep. Harry E. Mitchell of Arizona, who upset Rep. J.D. Hayworth in the heavily Republican Tempe district. "I simply cannot support a budget that allows key tax cuts to expire," said Mitchell, calling for extended capital gains and estate tax cuts. Kent Conrad didn’t fool Harry Mitchell.
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