Wallowing in Deficit

The economy is barely out of recession and the federal budget is going into the red. But that isn’t stopping President Bush and the House leadership from pushing the tax cut button. Last year, Congress approved Bush’s $1.3-trillion tax cut, which is scheduled to expire at the end of 2010. The expiration date was what kept the cuts from being total budget busters in decades to come and made it possible for moderate Democrats to join in a yes vote. Now, with Americans still smarting from the pain of April 15, House Majority Leader J. Dennis Hastert is set to demand Wednesday that the tax cuts, including complete elimination of inheritance taxes, become permanent.

In exchange for big benefits to the richest taxpayers, these permanent cuts would jeopardize Social Security and Medicare and radically worsen the federal deficit.

The Bush administration is greatly expanding government spending to accommodate the war on terrorism; in March, the House passed a resolution for a $2.1-trillion budget that would leave a $45-billion deficit. Making the tax cut permanent would increase projected deficits by an additional $397 billion from 2003 to 2012, according to the nonpartisan Center on Budget and Policy Priorities.

Far worse would come farther down the road. The tax cut package, if made permanent, would cost approximately $4 trillion in the decade after 2012. That is the very moment when baby boomers will begin retiring and drawing on Social Security and Medicare. In fact, the $4 trillion would entirely fund about 11 years of Social Security expenses at the current spending rate. Yet these cuts, when in full effect, would benefit mostly the top 1% of taxpayers, who as a group would receive twice as much from the cuts as the bottom 60%. The average yearly cut for the top 1% by 2010 is $53,123; for the bottom 60% it is $347.

This package was bad enough when it was passed originally. Ideally, it should be revisited by Congress and trimmed back, not extended. But House Republicans are hoping for ammunition to let them accuse the Democratic-controlled Senate of blocking tax cuts.

To add to the embarrassment of Senate Democrats, the Republicans are planning to attach to their tax bill the widely popular and sensible proposal known as the Taxpayer Protection and Accountability Act. That, you may remember, was the measure voted down last week after a shameless attempt by House leaders to use it as a vehicle to weaken campaign reform.

No matter what parliamentary tricks the GOP leaders employ this time, the tax cut extension is another cynical ploy dressed as lawmaking. As with the assault on campaign reform, voters will no doubt see through it and applaud those who block it.