Wednesday :: Feb 25, 2004

The Cost of Bush's Tax Cuts Dwarf Social Security Shortfall

by Steve

I want to circle back on an item from the Center for Budget and Policy Priorities, which is relevant to Greenspan’s suggestion today. Alex, one of our thoughtful commenters in the Social Security thread below said:

The reality democrats don't want to face is that the difference is going to be many many trillions of dollars and the tax cuts that have been instituted by Bush et al are a small small portion of what the shortfall will be.

Not that I am saying the tax cuts made sense - they did not (at least not to be gradated in over a decade and then made permanent as the Republicans will want to do) - but they are not the problem. The problem is that we have a system that is completely unsustainable and neither side wants to give an inch in order to find bipartisan solutions.

Sorry Alex. The CBPP said almost a year ago that the Bush tax cuts cost three times as much over the next 75 years than the Social Security shortfall.

The facts speak for themselves: the tax cuts that the Administration has proposed — the overwhelming bulk of which are included in the budget plans the House and Senate Budget Committees approved last week — would cost more than three times as much over the next 75 years as the entire 75-year Social Security shortfall. In fact, the cost of the tax cuts (including making the 2001 tax cut permanent and adding expensive new tax cuts on top of it) would be greater over the next 75 years than the combined deficits in Social Security and the Medicare Hospital Insurance program.

Even without the proposal to establish new tax-favored savings accounts — the part of the Administration’s tax-cut proposals that is in the weakest shape politically — the tax cuts would cost between 2.0 percent and 2.3 percent of GDP over 75 years. This is still three times the size of the Social Security shortfall and more than the Social Security and Medicare Hospital Insurance shortfalls combined.

Steve :: 10:32 PM :: Comments (0) :: Digg It!