Dems' 'New Direction' Points Toward Higher Taxes, Group Says

By Randy Hall | July 7, 2008 | 8:31 PM EDT

( - The Democratic Party's "New Direction for America" might attempt to steer government toward a sounder financial footing, but its course leads to $79.1 billion in new annual federal spending, according to a line-by-line analysis by a non-partisan taxpayers' group.

"Americans should take note that proposals containing many political promises are likely to contain many tax dollars as well," said Demian Brady, senior policy analyst for the National Taxpayers Union Foundation (NTUF), the research affiliate of the 350,000-member National Taxpayers Union, a non-profit citizen group founded in 1969.

"Given that the average House Democrat's agenda in the last Congress would have boosted spending by $521 billion, the 'New Direction for America' may appear to be modest," Brady noted.

"Many taxpayers, however, are probably hoping that if Democrats take control of Congress, they will somehow find the fiscal responsibility on Capitol Hill that has been lost amongst slabs of pork-barrel spending and IOUs from unfunded program liabilities," he added.

In conducting his review, Brady tracked the fiscal impact of proposed legislation listed in "The New Direction for America Book," a 31-page document posted at the website of House Minority Leader Nancy Pelosi, the California Democrat who could become speaker of the chamber if Democrats make a net gain of 15 seats in the Nov. 7 midterm election.

"The New Direction for America advances the right priorities -- to make our nation safer and our economy fairer; to make health care and college more affordable; to energize America with energy independence; and to guarantee a dignified retirement for all Americans," the document states.

The initiatives listed are "the product of a united Democratic House Caucus working together with our Senate colleagues," the file states. "With integrity, civility and fiscal discipline, our New Direction for America will use common-sense principles to address the aspirations and fulfill the hopes and dreams of all Americans.

"That is our promise to the American people," the document adds.

Brady's analysis found that health care represented the largest spending category at $28.8 billion, or 36 percent of the total agenda. Within this category, Democrats proposed to "fix the Medicare prescription drug program," which would cost $29.5 billion annually.

However, the plan did call for spending cuts amounting to just over $1 billion to "end wasteful giveaways to drug companies."

Veterans' care was high on the list as well, at $19.8 billion. The initiative to launch a "G.I. Bill of Rights for the 21st Century" would provide increased pay, health care and other benefits for veterans and their families.

This program would increase outlays by $99 billion over five years and would be offset by increasing the top income tax rate.

At $16.2 billion, education spending represented approximately 20 percent of the total net agenda.

The Democratic plan called for increasing the maximum individual Pell Grant to $5,100 ($4.0 billion in total annual spending), recruit science and math teachers ($3.7 billion yearly), and reduce college loan interest rates ($7.4 billion annually), among other items.

Another proposal called for an "AmeriSave" account system that would establish a dollar-for-dollar federal match for the first $1,000 contributed to a personal retirement plan. This initiative would cost taxpayers roughly $7.5 billion each year.

Brady noted that several of the "cost unknown" items could significantly affect the net total spending increase the Democratic agenda seeks. For example, the proposal to screen 100 percent of all inbound U.S. cargo will likely raise costs to the federal government, but specific estimates are not available.

Also criticizing the "New Direction" fiscal concepts on Wednesday was current House Speaker Dennis Hastert, who said in a news release that "while cutting the interest rate on student loans may sound warm and fuzzy, Americans themselves would be paying for this out of their own pockets in the amount of $60 billion over the next five years."

The Illinois Republican called that proposal "just another call for feel-good legislation" since the federal government, which "already pays a premium to lenders for charging lower interest rates, would be forced to dramatically increase its subsidies to lenders to compensate for the reduced rates."

Hastert also charged that a new Democratic majority in the chamber would allow President Bush's 2001 and 2003 tax cuts to expire, which "would reverse the unparalleled growth and success of Republican economic policies."

Citing a Treasury Department analysis, he stated that the Democrats' inaction would reduce economic growth by about $93 billion a year.

"Apparently, Democrat Leader Pelosi never took Economics 101," Hastert added.

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