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The Administration and key congressional leaders apparently intend to
focus on domestic programs this year in their efforts to reduce the
deficit. New Congressional Budget Office data, however, confirm that
tax cuts have
played a dramatically larger role than domestic spending increases in
fueling the deficit. If domestic programs are incorrectly regarded as the prime cause of the deficit, they could end up bearing a disproportionate share of any budget cuts. Programs for populations that have little political clout, like low-income families, are especially at risk. Efforts will also be made this year to extend permanently the 2001 and 2003 tax cuts, even though this would add nearly $10 trillion in deficits over the next two decades — the same period when the baby boomers’ retirement is expected to drive up government retirement and health costs. In addition to its high cost, extending the tax cuts would be unlikely to boost economic growth significantly. Growth has remained fairly steady over the past few business cycles, regardless of whether taxes were relatively low or high.
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For information on how the federal budget process operates