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The Bush tax cuts' effect on the deficit in one graph

By Ezra Klein

The Center for Budget and Policy Priorities updates its chart:

2010-11-16bud-f1.jpg

Look at that number in 2050: By that point, the Bush tax cuts have added debt equal to 100 percent of the nation's gross domestic product. Which goes to underscore not just how fiscally irresponsible the tax cuts are, but how politically irresponsible it would be for Democrats to extend them without demanding a deal on the debt ceiling, as well. The idea that Democrats would extend deficit-busting Republican tax cuts and then let Republicans hammer them and demand huge concessions when Congress needs to lift the debt ceiling in a few months defies belief.

By Ezra Klein  | November 17, 2010; 10:00 AM ET
Categories:  Charts and Graphs, Taxes  
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Comments

The problem is Republicans think if a deal can't be made on the tax cuts and they all expire, voters will blame Obama and the Democrats. They're calling their bluff.

If Democrats held separate votes on the universal tax cuts and the upper income, unanimously voting for the former and against the latter, it would all work out fine. At least a couple of moderate Republicans would have to vote for the universal tax cuts (and if none of them did, I think then voters would probably have the wits to blame Republicans rather than Obama).

But of course, most of the conservative Democrats are in that upper income band, as are most of their friends and donors. They don't want to end the upper income tax cuts. That's why we're going to end up in a position where Democrats extend all of the tax cuts, with no deal in return.

Posted by: bigmandave | November 17, 2010 10:10 AM | Report abuse

Whiich is why anybody smarter than Harry Reid (which is to say anybody) would have held a vote this summer, when in a much better position than now.

Posted by: 54465446 | November 17, 2010 10:35 AM | Report abuse

Now if we could just get someone to care about the deficit!

Posted by: klautsack | November 17, 2010 10:37 AM | Report abuse

Seriously, I'm normally willing to forgive caving to the realities of a 60-vote Senate with a Republican minority that doesn't seem to care about responsible governance, but the idea that we're going to pass tax cuts that we can't afford and then have the Republicans blast the Dems on the debt ceiling is just stupid. I happen to think the Bush Tax Cuts should expire anyway, and be replaced on a temporary basis with something else.

Seriously Dems, if you're not going to stand up for principle on the tax cuts, at least stand up for yourselves.

Posted by: MosBen | November 17, 2010 10:39 AM | Report abuse

In the real world, it's the *spending* that creates debt, Klein.

Posted by: msoja | November 17, 2010 10:42 AM | Report abuse

--*stand up for principle on the tax cuts*--

What principle is that? The money belongs to the collective principle?

Posted by: msoja | November 17, 2010 10:47 AM | Report abuse

All you need are 40 Democrats with the same discipline as the Republicans to filibuster any extension of the Bush tax cuts (including those for the sacrosanct middle class making under $250,000 for married couples filing jointly).

I'm not holding my breath for that.

Posted by: jnc4p | November 17, 2010 10:47 AM | Report abuse

All you need are 40 Democrats with the same discipline as the Republicans to filibuster any extension of the Bush tax cuts (including those for the sacrosanct middle class making under $250,000 for married couples filing jointly).

I'm not holding my breath for that.

Posted by: jnc4p | November 17, 2010 10:50 AM | Report abuse

In the real world, four minus two doesn't equal six, msoja.

No matter how many times you chant the article of faith that tax cuts never cause deficits, it doesn't change the fact that the recent tax-cutting Republican presidents are responsible for more of the national debt than all other presidents *combined*.

Posted by: jimeh | November 17, 2010 10:51 AM | Report abuse

I am so very irritated by the Dems. They are acting spineless and clueless. If they extend the Bush cuts for the wealthy, I will really start to regret the money and time I have given to the presidential and congressional campaigns over the last few years. And in 2012, you may see me supporting a Green party candidate or Al Franken, or anybody more progressive than these pandering yahoos even though they probably wouldn't win.

Posted by: ania8 | November 17, 2010 11:06 AM | Report abuse

msoja, the "principle" I'm talking about is that it's irresponsible to massively cut revenue on the hope and a prayer that spending will float down to match it, though it never does and the people pushing tax cuts never chase after spending with anywhere near the same tenacity.

And if we're going to collectively buy things, we need to collectively pay for them, over the long term at least.

Posted by: MosBen | November 17, 2010 11:19 AM | Report abuse

Please post the same graph regarding Medicaid.

Line 1. The deficit if Medicaid was allowed to die.

Line 2. The deficit if Medicaid is expanded.

Posted by: krazen1211 | November 17, 2010 11:35 AM | Report abuse

"No matter how many times you chant the article of faith that tax cuts never cause deficits, it doesn't change the fact that the recent tax-cutting Republican presidents are responsible for more of the national debt than all other presidents *combined*."


You mean, other than the current President.

Posted by: krazen1211 | November 17, 2010 11:37 AM | Report abuse

Ezra writes: "The idea that Democrats would extend deficit-busting Republican tax cuts and then let Republicans hammer them and demand huge concessions when Congress needs to lift the debt ceiling in a few months defies belief."

Klein, you know that Democrats are just that weak. That's the problem. A CNN poll shows that 64 percent of Americans want the rates to go up for people making more than $250,000 OR want the rates to go up for everybody.

Armed with that information, backing a middle class tax cut only, the Dems will cave and give cuts to Bill Gates and the boys on Wall Street. Wonderful!

Posted by: mypitts2 | November 17, 2010 11:47 AM | Report abuse

"What principle is that? The money belongs to the collective principle?"


They really are beating the class warfare drum.

Posted by: krazen1211 | November 17, 2010 11:51 AM | Report abuse

Can I sue the government for incompetence? Or should I sue the American people for continuing to hire self serving individuals into these positions?

This is NO BRAINER - Kill the Tax cut for households over 250,000. Kill Medicaid and reduce spending. Also there should be a law that says that we vote on which of the people in public office get raises or not. I'd bet they would have our interest in heart then wouldn't they.

Posted by: DSmith2010 | November 17, 2010 12:24 PM | Report abuse

"Can I sue the government for incompetence? Or should I sue the American people for continuing to hire self serving individuals into these positions?

This is NO BRAINER - Kill the Tax cut for households over 250,000. Kill Medicaid and reduce spending. Also there should be a law that says that we vote on which of the people in public office get raises or not. I'd bet they would have our interest in heart then wouldn't they.
"


That would be a really great vote. End the $250k tax cuts and end Medicaid in a single package.

Boom, deficit solved.


Would help out state budgets a lot too.

Posted by: krazen1211 | November 17, 2010 12:57 PM | Report abuse

Negative Externality Taxes are, by far, the greatest tax the American people --- and only pass through our 'Vichy' government on the way to a guileful and disguised corporatist EMPIRE.

Modern Tea Partiers need to learn about history, specifically the history of EMPIRE and corporate economic exploitation through the guise of a political conduit --- which is what the orginal Tea Party was all about.

How many tax haters today in America know that by far the greatest tax on Americans --- far greater than income taxes, property taxes, or Social Security taxes --- is the over $10 Trillion "Negative Externality Tax" which the people, through their government merely pass through to the hidden ruling-elite corporate/financial/militarist EMPIRE each year. And what can't be paid out of current government taxes on the people to this corporatist EMPIRE is forwarded as deficit and DEBT on the people and their children.

If various frustrated and angry sectors of the US populace, including so-called Tea-Partiers, were to become aware of both the level of economic oppression forced upon them by the the ruling-elite Empire, and the FACT that their own pauperization and the elites' untold wealth were only being effected through the illusion of government by foisting massive negative externality cost dumping Ponzi schemes, such as Wall Street CDOs, CDSs, and other derivatives, oily global warming fratricide, and contrived wars for weapons sales, then even the clueless tea-partiers will turn their wrath toward the corporatist EMPIRE in addition to the "Vichy" government which the EMPIRE controls.

Exposure of the massive, and greatest hidden "Negative Externality Tax" scam which is being foisted on people and our country by this disguised EMPIRE is going to be the catalyst that both opens peoples' eyes to the real source of their tyranny, and ignites a focused explosion at the EMPIRE when the system and the people reach the critical mass and there is "no room for denial" of being "Against EMPIRE".

Alan MacDonald
Sanford, Maine

Posted by: alanmd | November 17, 2010 2:05 PM | Report abuse

Again, Ezra, incredibly sloppy. The chart quite simply, does not reflect Obama's plan. He has categorically ruled out not making permanent the "middle-class tax cuts". . . $3.2 trillion in "budget busting" tax cuts over 10 years.

You are being disingenuous in the extreme to continually reproduce this chart in the context of this debate. The leaders of both parties have agreed to an extension of the vast majority of the cost of the Bush tax cuts. It is only on the cuts for upper income earners that there is disagreement, and these cuts reflect a trivial amount of the budget deficit, roughly $70-$80 billion annually over the next 10 years.

To imply that cancelling the cuts for upper income households has any more than a trivial effect on the long run budget situation of the US can only be due to ignorance, stupidity or dishonesty.

Posted by: cdosquared5 | November 17, 2010 2:08 PM | Report abuse

In other words, even eliminating the Bush tax cuts fails to fix the problem. At Clinton-era tax rates, we are in a worse debt situation than current day Japan by mid century.

Posted by: justin84 | November 17, 2010 2:42 PM | Report abuse

oh I left out one - they can kill Social Security along with this one - any one under 40 paying into this black hole is never going to see that money anyway.

Posted by: DSmith2010 | November 17, 2010 2:50 PM | Report abuse

I would like to see everybody get to keep the current tax rates for the first 200K/250K.

Even the rich!

Not many small business owners will be hurt by the above, because if I understand correctly, a business owner doesn't have to pay taxes on salary he pays his employees and he/she can deduct deprecation of equipment that is used in his business. And of course, he has family deductions; you only pay on taxable income, not the gross.

But above that, let the Clinton era rates return. There are other aspects of the taxes that can be tweaked.

Estate taxes can be tweaked if that is a problem for some.

Deductions for dependents can be adjusted if that is a problem

Capital gains is currently 15% and is due to be reset I believe. We can use this as a bargaining chip if necessary.

What some really want to do is protect the salaries of many high paid entertainers such as reported in 8 Nov Newsweek:

Rush Limbaugh 58+ million
Dave Beck 33 million
Sean Hannity 22 million
Bill O'Reilly 20 million
Jon Stewart 15 million
Sarah Palin 14 million
Don Imus 11 million
Bill Clinton 7.7 million
Keith Olbermann 7.6 million

There are about 41 others listed all the way to Axelrod who earns less than a million.

I don't think we have to worry about any of the 50 people reported in Newsweek. They will do all right whatever happens.

PS: I cut my TV service to Basic and now don't get the top few entertainers because my service stops just before Fox cable.

Posted by: LL314 | November 17, 2010 4:47 PM | Report abuse

"In other words, even eliminating the Bush tax cuts fails to fix the problem. At Clinton-era tax rates, we are in a worse debt situation than current day Japan by mid century."

Posted by: justin84


And what the chart avoids showing is that eliminating only the Bush tax cuts for the wealthy does next to nothing for the debt.

Posted by: bgmma50 | November 17, 2010 6:03 PM | Report abuse

Bull crap! Shame on you, Ezra!

Posted by: my4653 | November 17, 2010 6:59 PM | Report abuse

LL314...Who is Dave Beck? Lead guitarist for the WHO!

Posted by: my4653 | November 17, 2010 7:02 PM | Report abuse

LL314...Who is Dave Beck? Lead guitarist for the PROGRESSIVE LEFT HEAD-BANGERS!

Posted by: my4653 | November 17, 2010 7:03 PM | Report abuse

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