Wednesday, March 21, 2007
Interesting article in U.S. News & World Report: President Bush's Tax Cut Suicide, by James Pethokoukis:
Here are 400 billion reasons President Bush's 2001and 2003 tax cuts may not see the next decade of the 21st century. The five-year federal budget proposed by Senate Democrats last week lets the reductions stay in place after their current 2010 expiration date–if backers can come up with $400 billion to pay for them in 2011 and 2012. Extending them to 2017 would "cost" $1.8 trillion....Now given that the current Congress is having trouble coming up with $40 billion-$50 billion for a temporary fix to the alternative minimum tax, finding a spare $200 billion a year seems like a tall order indeed....
Most Washington watchers say that the Bush capital gains, dividend, and marginal rate tax cuts would be left to die with only the social policy tax cuts–such as increased child tax credit–standing any chance of surviving.... If Bush's primary domestic legacy does disappear, he really only has himself ultimately to blame–not Democrats. That may seem counterintuitive or even unfair given that Bush is the biggest tax-cutter since President Reagan. But consider these four ways in which the president has inadvertently planted the seeds for the demise of his own fiscal policies.
- Failed to properly time the 2001 tax cuts
- Failed to make the 2001 tax cuts "growthy" enough
- Failed to control spending
- Failed to reform entitlements
....[A]s economist John Maynard Keynes famously commented, "In the long run, we are all dead." And so, it seems likely–unless the budget is showing a big surplus in 2010–are the Bush tax cuts.