Views from elsewhere: Can we still afford Bush-era tax cuts?

Back in 2001 and 2003, when Congress enacted the tax cuts sought by President George W. Bush, the changes were put in place only through 2010.

That allowed future budgets to appear to be balanced. (Never mind that since the tax cuts passed, the country has waged two wars, passed a drug benefit for senior citizens that wasn't fully funded and, most recently, undergone the worst economic crisis since the Depression.)

Bush had campaigned on a tax cut, a return to taxpayers of part of what they were contributing to the then annual surplus in the federal budget. At that point, surpluses were forecast into the indefinite future; Bush also said some of those surpluses would go to paying down the national debt and to Social Security.

The tax cuts, as Congress passed them, became more generous as the years marched toward 2010 — an example is the complete disappearance of the estate tax this year, and only this year — which made them even more unsustainable for the long haul.

As accustomed as taxpayers may be to the current tables in their IRS booklets, the rates cannot support the kind of spending the U.S. has been doing, let alone bring the accumulation of debt closer to a level the country can live with.

That argues for letting all the Bush tax cuts expire, or at least the great bulk of them. Taxpayers in the lowest brackets, who generally spend every penny they can hang onto, perhaps should be spared in these tough economic times.

But most people got by just fine in the late 1990s under the tax rates generally known as Bill Clinton's plan to get the deficit he had inherited under control.

Meanwhile, the country is now a decade closer to the payouts promised to baby boomers for their retirements. The money that Social Security has "lent" to general government will gradually need to be returned to that program.

The boomers' retirements have a snowball effect, as a ready source of borrowing first disappears and then has to be repaid. Meanwhile, interest due on the debt also grows.

Those budget facts were exactly why the tax cuts of the early 2000s were written with sunsets. A country that needs to get its deficit spending under control would be wise to accept that fact, and let most or all of the cuts expire.

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Comments

 's picture

Tea Party

Let's at least acknowledge that the Tea Partiers left the Republican Party because of the Bush fiscal irresponsibility. Then let's acknowledge that their political principles are self-contradictory because they neither understand the constitution nor American History. You can't be for small government, low taxes, and at the same time say that you support the Constitution. Its was the anti-Federalists, the people opposed to the Constitution, like Thomas Jefferson who supported small government and low taxes even at the Founding..

 's picture

Read history not Beck

The Reagan tax cuts in 1981 had nothing to do with the recovery. Volker forced the economy into recession in 1981 and the foreign policy situation had changed and its his steps that helped the recovery generate some power. If Reagan's Tax Cuts of 1981 helped the economy recover then why didn't the Reagan Tax Increase of 1983 not drop the economy into recession? Because neither had much effect on economic growth.

 's picture

Bush Tax Cut failure

Read the article from Bloomberg that appeared yesterday on MSNBC's website, "The wisdom and folly of the Bush Tax Cuts". Buried in the story is a critical fact - from 2001 through 2006 economic growth in the US averaged 2.3%. That's the worst in post-Depression history. Why? Bush's Tax Cuts had unbalanced the budget. The US went from surplus to deficit in one year. As the article explained, the Tax Cuts were not designed to stimulate the economy but to change the incentives for savings and investment. Trillions of dollars that should have gone to consumption instead went in large part to finance the housing bubble. Merged with trillions more that were invested in securities backed up by fradulent mortgages and sold to Fannie May, Freddie Mack, and insured by AIG or sold to foreign investors, inflated a market that had to collapse. Trillions were diverted from productive investments into non-productive gambling and undermined the US economy. At 2.3% growth the economy was hemorrhaging jobs long before the Bush recession of 2007.

PAUL ST JEAN's picture

Tax cuts swell the size of

Tax cuts swell the size of the deficit for one reason only; the morons in D.C. don't curtail any of their spending. We shouldn't be "shoring" up SSI and Medicare unless we can get a commitment from the elected money spenders to stop raiding the funds and pay back what they've already taken out of them.
So, if SSDD ever wins $6 million in a lottery, you're gonna tear up the ticket, right? Otherwise, that would make you one of the rich cancers to our country's future wouldn't it? I think you need to WALK THE PLANK!! on this one, my friend. AARRGHH!!!

PAUL ST JEAN's picture

Nice to see ssdd didn't

Nice to see ssdd didn't resort to name calling. If he's a college graduate, it's a great example of one being educated beyond one's level of intelligence. No?...read his posts.

 's picture

double triple

Doubled revenues? Okay... Tripled the deficit, yes.

 's picture

Cranky...hasn't your doctors

Cranky...hasn't your doctors backed you're dose down yet? You level of paranoia is scary. Also have you figured out yet that no matter how many times you write "CON" it doesn't make you sound any more intelligent than the early mammal who craled from the primordial ooze.

In a down turned economy you DON'T raise taxes since 50% of the people don't pay any more and the top 1% who pay 60% of the bill will find ANYWAY they can to not pay. When the top weathly don't have reason to invest in the US economy they look elsewhere. This is serious economic lesson 101. But yet again cranky and his merry band of government robbers (robbers of freedom and money) want to give everyone else's money to the feds.

 's picture

Gary52 said: "He has it, I

Gary52 said: "He has it, I want it. Great mentality!" And that's been the Republi-CON operating mantra since the split with Teddy Roosevelt. The Republi-CONS seeks a return to the caste system in this country where those with money can control those without. Besides the Bush tax cuts (which never seemed to make it to my pocket), Bush did not put his war funding in the federal budget in an effort to hide, or at least disguise, it's real cost and thus keep his record deficit spending from becoming too apparent. The Republi-CONS and their T-Party cronies are constantly complaining about the "tax and spend" Democrats. Where in the H-E-double hockey sitcks were they when Bush pushed us into his war of hubris causing not only record spending, but 4000 military and hundreds of thousands of civilian lives? Where were they when Bush pushed through his underfunded medicare prescription plan? Republi-CONS are H-Y-P-O-C-R-I-T-E-S.

 's picture

No matter... in this economy

No matter... in this economy the answer is to further reign in government, not turn the screws on the working class. Raising taxes is never the answer and the sooner both parties figure that out, the better.

GARY SAVARD's picture

He has it, I want it. Great

He has it, I want it. Great mentality!

RONALD RIML's picture

That's what makes Capitalism work..... ;)

Greed, I tell ya, Greed.....

expiring tax cuts

Hats off to the editorial boar, you hit he nail on this one, and to al those GOP right wing zealots moaning about Democrat/ Obama Care spending, lease remember that the lasttime, we had single year surpluss was under Bill Clinton, and if you watched 60 minutes tonight, they stated that unless we get health care spending under control, that will bank rupt us, yet Bush's medicare prescription bill made it illegal to negotiate with the pharamaceutical giants for lower prices; what is the logic behind that, yes I'ma Democrat, and proud of it!

PAUL ST JEAN's picture

Heard that on Fox News, did

Heard that on Fox News, did ya?

PAUL ST JEAN's picture

Unfair because.........If he

Unfair because.........If he and his accountants found ways not to pay taxes, more power to 'em. When did the confiscatory taking of one's wealth by government for the sole purpose of transferring it to another, who did nothing to earn it, become a good thing for America?

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