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Tax Increases, part III

Posted By Barry Ritholtz On February 22, 2004 @ 9:24 pm In Finance | Comments Disabled


On Friday, we discussed the realities of tax rises [1] in the coming years. Also mentioned were some of the Tax Scams [2] which the IRS commissioner said makes us all pay about 15% higher taxes.

Now, even Congress has recognized the fiscal realities [3]. But leadersin Congress have a small problem — “they are in a dilemma over the budget time frame. If they draft a 10-year plan showing the tax cuts ending, they defy their president’s wishes. But a 10-year plan showing the tax cuts continuing would project a huge deficit, which lawmakers do not want to address in an election year.”

Hmmm, seems like a tricky problem. So how do our spineless representatives deal with so difficult a conundrum? They don’t. They turn instead to a five-year plan that avoids both problems:

“Congressional budget writers next month will likely draft truncated blueprints for tax-and-spending policies that will effectively ignore President Bush’s call to extend his tax cuts beyond their 2010 expiration date, House and Senate budget aides said yesterday.

The decision to draft five-year budget plans — rather than the 10-year plans of recent sessions — would mean that any effort this year to extend the cuts will take 60 votes to block a Democratic-led filibuster in the 100-member Senate. That is a hurdle that even Republicans say is insurmountable in an election year.”

Brace yourself. Reality avoidance ahead!

Budget Plan May Block Extension of Tax Cuts [3]
Jonathan Weisman
Washington Post Staff Writer
Friday, February 20, 2004; Page A04


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2004/02/tax-increases-part-iii/

URLs in this post:

[1] tax rises: http://bigpicture.typepad.com/comments/2004/02/tax_increases_a.html

[2] Tax Scams: http://bigpicture.typepad.com/comments/2004/02/tax_me_if_you_c.html

[3] fiscal realities: http://www.washingtonpost.com/ac2/wp-dyn/A55934-2004Feb19?language=printer

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