ShareThisWhen President George W. Bush took office in 2001, he inherited an annual budget surplus of more than $200 billion and a 10-year projected surplus of $5.6 trillion. He used those numbers to justify tax cuts of about $2 trillion over the next decade.
Between the tax cuts, openhanded spending by the then-GOP-dominated Congress, the wars and the dot-com bust, the annual surplus disappeared and soon afterward so did the forecast of $5.6 trillion in the bank. Instead, the government began running ever-increasing deficits that this year will reach a record $1.47 trillion, meaning that 41 cents of every dollar Congress spends is borrowed.
Deficits are now back as a political issue, and so are the Bush tax cuts. The Bush tax cuts of 2001 and 2003 are set to expire in January unless Congress extends them. Bush and the Republicans set the tax cuts to expire at a date certain to make them look more affordable than they really were.
Congressional Republicans are set on making the tax cuts permanent, at a cost of nearly $3 trillion over the decade. President Barack Obama would extend most, but not all of the tax cuts. Middle- and lower-income taxpayers would keep their lower rates, but individuals making more than $200,000 a year and couples making more than $250,000 would revert to the old top rates. The administration would also let the 15 percent capital-gains tax revert to 20 percent. Even so, the Obama plan won't come cheap -- $2.5 trillion over the next decade.
Republicans are charging that sticking with their original game plan to let the tax cuts expire is a Democratic-inspired tax increase, and they plan to spend the August recess denouncing "the Democrats' 2011 tax hikes."
Further adding to the cognitive dissonance is a new Republican fixation on the deficit. GOP lawmakers last week opposed extending unemployment benefits on the grounds it would add $34 billion to the national debt. And they have begun insisting that Democratic spending plans be financed with budget cuts elsewhere. But faced with actually making cuts in an overly generous Veterans Affairs bill, the Republicans folded. The bill passed, 411-6.
Simply put, the only way the Bush tax cuts can be sustained under either the Republicans' plan or Obama's is to add to the national debt and borrow the money. It's either the tax cuts or the deficit. The Republicans can't have it both ways.
(Distributed by Scripps Howard News Service, http://www.scrippsnews.com)
