Economic State of the Nation
February 2, 2004
At the end of September, our nation's fiscal situation will probably be in even worse shape than it is now. And that is very bad indeed, according to a report released last week by the Congressional Budget Office. Although the deficit is projected to disappear by 2014, this is only by making completely unrealistic assumptions, which CBO is required by law to make.
Chief among these is the assumption that all tax cuts enacted in the last 3 years will expire on schedule and that no new tax changes are enacted, says Bruce Bartlett:
- The price Republicans had to pay for using special legislative procedures in the Senate to avoid a filibuster on President Bush's tax cut proposals is that all tax cuts enacted since 2001 will expire some time before 2010.
- Extending all of these provisions would reduce federal revenues by $2.3 trillion between 2005 and 2014.
- Indeed, it is a major goal of the White House and Republicans in Congress to make every tax cut enacted since 2001 permanent.
- However, the chances of their doing so this year are nonexistent; that would require 60 votes in the Senate -- a few too many at the present time.
- The most we can expect is a temporary extension of provisions expiring this year, but even those can be put off until next year without raising anyone's taxes.
At some point Bush will have to address the deficit. Bartlett says he and many other conservatives fear that when the time comes, higher taxes, not spending cuts, will be the order of the day.
Source: Bruce Bartlett, "Economic State of the Nation," National Center for Policy Analysis, February 2, 2004.
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