Robert Greenstein, the Center’s executive director, and John Podesta, president and CEO of the Center for American Progress, explain why President Bush’s tax cuts for the wealthy should expire on schedule in December in this op-ed published in the Financial Times:
BEYOND THE NUMBERS
UPDATE, SEPTEMBER 30: We’ve revised some of the figures in this post. Click here for the updated numbers.
As I’ve said before, from the standpoint of economic efficiency there’s a clear-cut case for letting the Bush tax cuts for people over $250,000 expire on schedule in December. Sunsetting the high-income tax cuts makes just as much sense from the standpoint of equity. Recent data from the Congressional Budget Office (CBO) show a stunning shift in income away from the middle class and towards the highest-income people in the country over the last three decades:
Today's lead editorial in the Washington Post warns that a recent Senate vote on extending all of the Bush tax cuts is a "chilling sign of what a number of lawmakers believe passes for fiscal responsibility."
Rep. Paul Ryan and his budget plan are getting a lot of respectful attention in the press. (See here and here.) New York Times columnist Matt Bai suggests Ryan’s plan might represent “the starting point in what could be a serious negotiation about entitlements and spending.” But a careful look at the plan shows it to be a radical blueprint to shift massive resources from the broad majority of Americans to the very wealthy, while leaving the budget on an unsustainable course for decades.
Who stands to gain the most if Congress extends the middle-class Bush tax cuts: a middle-income worker or a millionaire? The millionaire (see graph). That’s one more reason — on top of those listed here — why Congress shouldn’t add a trillion dollars in deficits and debt over the next decade by also extending the tax cuts exclusively for the richest 2 percent of families.
The Heritage Foundation’s Brian Riedl continues to defend his claim that the Bush tax cuts aren’t a major contributor to current and future deficits. Our analysis shows otherwise.
Last week, 42 senators voted for a proposal by Senator Jim DeMint (R-SC) to permanently extend all of the Bush income tax rate cuts while cutting programs to pay for it (though they didn’t specify which ones). Supporters included all Senate Republicans except Senator George Voinovich, plus two Democrats — Senators Ben Nelson and Blanche Lincoln. This vote, which has received little media attention, constitutes a major warning to anyone concerned about the nation’s fiscal future and its basic priorities.
Today, we sat down with Chuck Marr, the Center’s Director of Federal Tax Policy, to discuss the tax cuts that are set to expire at the end of the year.
At its meeting yesterday, the President’s Commission on Fiscal Responsibility and Reform discussed imposing a numerical limit on federal spending as a share of the economy. One of the commission’s co-chairs has suggested capping spending and revenues at 21
percent of gross domestic product (GDP), the average spending level over the past 40 years. But as I explain in a new report, averages from the past aren’t a good guide for the future:
On our conference call for journalists this morning, former Federal Reserve Vice Chairman Alan Blinder made the case for letting President Bush’s tax cuts for those making more than $250,000 expire this year and using the savings over the next two years for measures that would better stimulate the economy, such as extended unemployment benefits and food stamps. Below is the audio and a cleaned-up transcript of the presentation portion of the call.