Needless to say, President's Bush's budget proposal for fiscal 2008 was dead on arrival on Capitol Hill. This is not a criticism, because instant pointlessness is almost a procedural requirement. But it does have implications. Don't ask whether the budget makes sense on its own terms. All one can intelligently ask about these Washington set pieces is whether they advance the discussion of what needs to be done and move the likely outcome in the right direction.
The budget did both, though that was probably not Bush's intention. With a tight grip on spending, the president tells us, the country can have his tax cuts, and then some, and still balance the books by 2012. This is so misleading that, for anybody paying attention, it isn't really misleading: It has the virtue of being fully incredible. Is there anybody in Washington who does not understand by now what keeps the deficit falling in the administration's projections? The answer, not counting the usual fixes, is the alternative minimum tax.
You will have heard of this, because the chances are you are either paying it or soon will be. Because of inflation and rising incomes, the number of households caught by the AMT is growing. If the president gets his way, it will grow much faster. Suppose the budget were passed as it stands and that the tax cuts of 2001 to '04 were made permanent. Then, according to the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, the number of taxpayers caught by the AMT would rise from 3.5 million (4 percent of taxpayers) in 2006 to nearly 40 million (38 percent of taxpayers) in 2012. This massive expansion of the AMT's base is what brings the budget into balance, using the administration's own arithmetic.