September 15, 2014

Borrowing To Pay For Permanent Tax Cuts Could Harm Economy

  • The nation's fiscal future depends on the balance between the spending in the federal budget and the revenues flowing into the treasury. Tax policy...

A rational debate about tax policy should include whether to let the 2001 and 2003 tax cuts expire, says Concord Coalition Executive Director Robert Bixby. That would bring federal revenues up to about 20 percent of GDP by 2020 -- the same as in 2001, the last time there was a budget surplus.

In an op-ed Monday in The Tampa Tribune, Bixby points out that allowing the tax cuts to expire -- along with enacting appropriate defense cuts and restraints on all other programs -- would bring the deficit down to a sustainable level while entitlement-spending reductions could be phased in.

If Congress insists on extending the tax cuts now, Bixby said, it should do so only on a temporary basis as the economy recovers. A permanent deficit-financed extension, he argues, would actually harm the economy while increasing the debt burden on future generations.