March 21, 2001

How to Avoid Over-Committing the Available Surplus:
Would a Tax-Cut "Trigger" Be Effective or Is There a Better Way?
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On March 16, the Center on Budget and Policy Priorities released a report, How to Avoid Over-Committing the Available Surplus: Would a Tax-Cut "Trigger" Be Effective or Is There a Better Way? The report analyzes suggestions to attach a "trigger" to legislation cutting taxes that would automatically delay some or all of the tax cuts in the event of a deficit. As the report explains, a trigger would be very unlikely to work effectively and would likely increase the risk of deficits, because it could lull policymakers into voting for a substantially larger tax cut than they otherwise would support and than would be fiscally prudent. The report's findings include:

The Center's report concludes that a much better alternative to the trigger would be a budget reserve, under which this session of Congress would enact tax cuts or program increases that use up some but not all of the projected surpluses and would set a substantial portion of the projected surpluses to the side. Should surpluses materialize in later years, Congress could enact additional tax cuts or program increases at that time.