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Ross
09-30-2004, 01:55 PM
Interesting article from NYT with some details on the budget situation. I think it supports my argument that at some point down the line you and I will pay for the Bush tax cuts for the very wealthy:

Whoever Wins, More Taxes May Be the Only Way Out
By EDMUND L. ANDREWS

It's often forgotten that President Ronald Reagan signed a bill to raise taxes in the early 1980's after first cutting them. President George H. W. Bush abandoned his "read my lips" pledge and raised taxes in 1990. Could Republicans soon be in a similar position again?

It would hardly seem so after their victory in Congress last week, when they extended a big part of President Bush's tax cuts worth about $146 billion over 10 years. Since taking office in 2001, President Bush has pushed through tax cuts valued at about $1.9 trillion.

But it is worth asking where things go from here. If President Bush is re-elected, he and the Republicans face a big agenda, including an unfinished war in Iraq, and virtually all of his tax cuts will be financed with borrowed money. Unless the government defaults on its debt, that money will eventually have to be repaid.

Faster economic growth will not do the trick. The nonpartisan Congressional Budget Office already assumes that the economy will grow at a solid pace in the years ahead and that tax revenues will climb even if President Bush's tax cuts are made permanent.

But if military spending in Iraq continues, even at lower levels, and President Bush prevents the alternative minimum tax from raising taxes on some 30 million families, the budget office estimated that federal deficits from now through 2014 would total $3.5 trillion.

Federal interest payments alone - the "debt tax," as Democrats are fond of saying - would climb to $402 billion in 2014 and amount to 2.2 percent of the gross domestic product. Measured against the size of the economy, those deficits and interest burdens would be smaller that those of the 1980's and early 1990's. But they would be occurring just when Social Security and Medicare entitlements are expected to soar as a result of baby boomers' retirement.

Stuart Butler, a senior fellow at the Heritage Foundation, a conservative research group, contends that political leaders will have no choice but to raise taxes if they do not cut back on trillions of dollars in unfunded commitments - most of them associated with Medicare, which President Bush and Congress expanded greatly with last year's prescription drug program.

The pressure to raise taxes is likely to increase for whoever wins the next election. Senator John Kerry, the Democratic nominee, has yet to reconcile his own tax and spending plans.

Administration officials remind audiences constantly that the federal deficits are largely a result of economic shocks: the collapse of the stock market bubble, which wiped out trillions in stock market value; the recession of 2001; and the plunge in business investment that lasted until this year.

But those problems have almost nothing to do with the budget challenges ahead. The Congressional Budget Office estimated this month that cyclical economic problems contributed only $47 billion of this year's anticipated deficit of $422 billion. Next year, cyclical economic problems are expected to have almost no impact on the budget, but the deficit is expected to be $348 billion.

Going forward, virtually the entire federal deficit will be a result of structural causes - tax and spending policies set down by the president and Congress.

President Bush has called for freezing the level of nondefense discretionary spending over the next few years, which would result in real cuts for many programs, like housing assistance, after adjusting for inflation. But those cuts affect less than one-fifth of the federal budget and would barely nick future deficits. The rest of the budget - Social Security, Medicare, military spending, domestic security and interest on the debt - would continue to grow smartly.

Federal revenues, meanwhile, are expected to climb only modestly. Federal tax revenues, which go up and down in response to policy changes and to the economy, have averaged about 18.6 percent of gross domestic product since the 1970's. That share plunged after 2000, initially because of the stock market crash and the recession but increasingly because of tax cuts.

TAX REVENUES in 2004 are expected to make up only 16.2 percent of gross domestic product, the lowest share in more than four decades. Although the share is expected to climb to 17.6 percent over the next decade, it would still be lower than it was in the 1960's.

To be sure, the federal government could keep borrowing more. But higher debt means higher interest costs. That would itself amount to a tax imposed every time a person borrowed money.

Absent cuts in spending far more draconian than anything President Bush has yet proposed, only one other option remains: higher taxes.

Fair_Play
09-30-2004, 02:05 PM
"Senator John Kerry, the Democratic nominee, has yet to reconcile his own tax and spending plans."

Of course he has! $ .50 per gallon, for starters.

And Teresa to be granted an even greater tax shelter!

/ccboard/images/graemlins/grin.gif /ccboard/images/graemlins/grin.gif /ccboard/images/graemlins/grin.gif Joking aside, this article is food for thought - do we want to be taxed by Democrats, or do we want to be taxed by Republicans... /ccboard/images/graemlins/confused.gif /ccboard/images/graemlins/confused.gif

All the Best,

Fair Play

Wally_in_Cincy
10-01-2004, 05:49 AM
We don't need to raise taxes. We need to cut spending.

Whatever happened to the Grace Commission report? Does any politician have the cojones to blow the dust off that sucker and take another look at it?

This is really pissing me off /ccboard/images/graemlins/smile.gif

eg8r
10-01-2004, 09:32 AM
[ QUOTE ]
Will Bush agree to raise taxes if he wins? <hr /></blockquote> I absolutely hope not. This is the wrong thing to do. He needs to find a way to cut spending. If there is a liberal side to Bush it is spending. Kerry's economic plan seems to be the same thing, more of the same, more spending.

eg8r