GOP budget amendment has Dems eyeing 'hypocrisy' charge on taxes

Senate Republican support for a balanced budget amendment has given Democrats ammo in the lame-duck battle over whether to extend the tax cuts passed under former President George. W. Bush.

“It will be addressed as a larger strategy of pointing out their hypocrisy on the economy,” said a senior Senate Democratic aide.

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Senate Democrats met behind closed doors for nearly 10 hours last week to discuss their political strategy on the looming battle over the Bush-era tax cuts.

Senate Majority Leader Harry Reid (D-Nev.) signaled Thursday that Democrats would make a major issue of the fiscal impact of extending current rates for all taxpayers.

“My friend Sen. McConnell has offered legislation to extend them all, costing $4 trillion,” Reid told reporters, emphasizing the price tag on Republican leader Mitch McConnell’s (Ky.) legislation to permanently extend all of the Bush tax cuts.

The Senate Republican Conference adopted several resolutions on Tuesday aimed at reducing the federal deficit. They included a proposal sponsored by Sen. John Cornyn (R-Texas) expressing support of a balanced budget amendment.

“We know that a balanced budget amendment actually works because virtually every state in the nation has one, including my state of Texas,” Cornyn said in a floor speech. “Only the federal government has really no requirement of a balanced budget, and can spend huge deficits, borrowed money it does not have.”

If Congress adopted a balanced budget amendment — which three-quarters of the states must ratify — it would require $665 billion in spending cuts in 2012, based on budget deficit projections the Congressional Budget Office released in August.

The CBO projections assume no changes will be made to current law. Senate Democrats argue that an extension of the Bush tax cuts would require drastically deeper cuts in discretionary and mandatory spending.

“I hope that those who care about fiscal responsibility will hold tight and remember it’s irresponsible to borrow another trillion dollars to give tax cuts to the wealthy,” Sen. Byron Dorgan (N.D.), outgoing chairman of the Democratic Policy Committee, told The Hill.

Cornyn said in an interview that his balanced budget proposal does not include a mechanism to exempt the Bush tax cuts from the accounting rules.

House Democrats, by contrast, passed pay-as-you-go legislation that exempted expensive items such as the extension of middle-class tax rates from accounting requirements.

Cornyn, however, says his goal is to set a broad standard of fiscal responsibility and leave it up to Congress to work out the details.

“I think it’s bogus to say you need to raise taxes to maintain current tax policy,” Cornyn said. “The president is being hypocritical when he says we need to find offsets or cuts for continuation of current tax policy for people making $250,000 or above but he’s not doing it for those who make less.”

Cornyn called House Democrats' pay-as-you go rules “phony” because they exempted expensive policies.

“This is really designed to create a requirement and expect Congress to discuss how to best meet that requirement,” Cornyn said of the balanced budget amendment.

The proposed amendment would require the president to submit to Congress before each fiscal year a budget in which total federal spending does not exceed total revenue.

It would require a supermajority of both chambers of Congress to raise taxes and place a limit on total federal spending.

The Senate came within one vote of the 67 necessary to approve a change to the Constitution when the balanced budget came to the floor in 1997. Eleven Democrats voted for it.

Democratic Sens. Max Baucus (Mont.), Mary Landrieu (La.), Tom Harkin (Iowa) and Herb Kohl (Wis.) voted for the amendment.

“It is important to note at that time when 66 senators voted on a bipartisan basis for a balanced budget amendment, the deficit was only 1.4 percent of gross domestic product. Today it’s 8.9 percent,” Cornyn noted in his floor speech.

Nick Simpson, a spokesman for the Senate Republican Conference, disputed the Democratic argument that a balanced budget amendment doesn’t square with extending the Bush tax cuts at a cost of $4 trillion over 10 years.

“It doesn’t cost the federal government anything to keep tax rates the same, but it would cost our economy to take even more tax dollars from job creators,” he said. “It’s as simple as this: Democrats want to take more money from American families and small businesses when unemployment is close to 10 percent; Republicans don’t.”