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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