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Trillion-Dollar Gimmick: Extending
Bush's Tax Cuts Through Sleight of Hand By David S. Broder,
Washington Post, Sunday, February 19, 2006; B07 Back when the late
John Mitchell was attorney general in the Nixon administration, he advised
reporters, "Watch what we do, not what we say." That advice certainly applies to the
Bush administration as well. The latest bit of evidence to come to my attention
is what you might think of as the Case of the Disappearing Trillion. The tip-off arrived
last week in an e-mail from the Center on Budget and Policy Priorities. It is a
Washington research organization with a distinctly liberal point of view but a
deserved reputation for accuracy in its figures. In this case, the
information the center cites was confirmed to me - though with a very different
interpretation - by officials of the White House Office of Management and
Budget. It involves the treatment in the budget of the Bush tax cuts passed by
Congress in 2001 and 2003. Those rate reductions,
when enacted, had expiration dates of 2010, designed to keep their long-term
costs within the limits set by the budget resolutions of which they were a
part. The president is urging Congress to make those tax cuts permanent, but
his proposal is controversial and has not yet passed. This year, however, the budget the
president submitted on Feb. 6 simply assumes
that the tax cuts have been made permanent -- and thus includes them
in the "baseline" for all future years. The effect, according to the center's analysis, is that
"legislation to make these tax cuts
permanent will be scored as having no cost whatsoever." In fact, this analysis
says, "The administration's proposal, by changing the rules after the 2001
and 2003 tax cuts were enacted but before they are extended, would ensure that
the cost of continuing the tax cuts in the years after the current sunset dates
would never be counted. The costs in those years were not counted when the tax
cuts were first enacted. . . . Now, the administration is proposing that the
tax cuts for those years also be ignored when the tax cuts are extended. To
fail ever to count the cost of the tax cuts in the years after the sunset dates
. . . would represent one of the largest and most flagrant budget gimmicks in
recent memory." How large? The Congressional
Budget Office scores the cost of making these tax cuts permanent at $1.6
trillion over the next decade. The administration's estimate is somewhat less
-- $1.35 trillion. But, the folks at the
OMB told me, it's wrong to claim that they are hiding that cost. They told me
to get out my copy of the budget, and they told me right where to look. And
sure enough on Column 8, Line 11 of Table S-7 on Page 324 of the green-bordered
book, I found the very figure they had cited -- $1.35 trillion. The heading on the
chart of Effects of Proposals on Receipts reads: "Make Permanent Certain
Tax Cuts Enacted in 2001 and 2003 (assumed in the baseline)." Those last
four words conceal more than a trillion dollars worth of lost revenue. But that is not all,
my OMB friends argued. If you turn to a 396-page volume called Analytical
Perspectives, as any conscientious citizen should do, on Page 215 and again on
Page 360, you will also find acknowledgment of the change in the bookkeeping.
The key passage says, without elaboration, that "the 2001 Act and 2003 Act
provisions were not intended to be temporary, and not extending them in the
baseline raises inappropriate procedural roadblocks to extending them at
current rates." That sentence must be
parsed. The basis for saying those two tax cuts were "not intended to be
temporary" is that when Bush recommended them to Congress, he said they
should be permanent. But Congress put time limits on them -- which Bush now
finds it inconvenient to acknowledge. And those
"inappropriate procedural roadblocks to extending them"? Translation:
If you tell Congress the cost of making those tax cuts permanent, lawmakers
might have second thoughts about doing it. In fact, it turns out
that Bush tried to get Congress to go along with this bookkeeping switch back
in 2004, actually submitting legislation to authorize the change. The House
refused to accept it. He put it back in his budget last year, with the same
result. But this year he's back again, with more urgency, as he presses the
case to make these tax cuts permanent. Now that you know
exactly how easy it is to find this all explained in the budget, I'm sure you
are as reassured as I am about the candor of this administration. http://www.washingtonpost.com/wp-dyn/content/article/2006/02/17/AR2006021701848.html |
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