The Tax Cut Debate

Right now our leaders in Washington D.C. are strongly considering extending the massive tax cuts brought into existence by President George W. Bush. If Congress does nothing, the tax cuts will soon expire and everyone will owe Uncle Sam more money.

That’s not going to happen. With the recession tamping down investments and propping up unemployment figures, Washington isn’t about to take a chunk of change out of the voting public’s pocketbook.

What isn’t certain is whether those same tax cuts ought to be extended for everyone. In 2008, then-presidential candidate Barack Obama supported extending the Bush tax cuts for families earning up to $250,000 while eliminating the reduction for the richest Americans.

The U.S. Treasury estimates that extending the Bush tax cuts over the next decade for high-income earners could cost $700 billion. Incidentally, the cost of extending the Bush tax cuts for everyone else for the next 10 years adds up to about $3 trillion.

That’s right. Congress is pondering a tax cut that could cost $4 trillion over the next decade.

Some on the left argue that too much is made of deficits. That’s probably true to some extent. America should be spending its way out of its current economic slump — with tax incentives for businesses willing to hire, or perhaps via a second stimulus package, this one aimed entirely at correcting moribund infrastructure. Any tax-cut extension should only last long enough to help us climb out of this current recession.

Here’s why. Recession or not, the U.S. government has a $13.4 trillion deficit to worry about. Spending money wisely is like saving money in the long run. By comparison, merely agreeing to massive cut taxes with no limits in place may help a little, but it sure won’t fix Uncle Sam’s financial house.

An extension of all the Bush tax cuts for a decade also lacks any assurance that it will solve the nation’s ills. Sorry, but we deserve strong assurances.

Temporarily extending the tax cuts for families earning up to $250,000 makes sense. No, potentially adding mightily to the federal deficit isn’t a happy prospect. But as measures go, it’s not nothing. It would likely soften the struggles of hard-working families.