It's unlikely that Congress will pass too many more pieces of substantial legislation before they adjourn for the year. There is even talk of neglecting to take up any standard appropriations bills. And let's not forget about the Majority's tactless stunt to "deem as passed" an FY 2011 budget via a rule vote for the emergency supplemental package; a maneuver that Majority Leader Steny Hoyer called a "very meaningful action." Don't even get me started on that comment. It's a blog post for another day.
We will, however, see at least some action on one issue in particular - the Bush tax cuts found in the Jobs and Growth Tax Relief Reconciliation Act of 2003. That's because most of these tax cuts are set to expire after 2010. Up until now, we have heard surprisingly little on the issue, which is why we need to continue to pressure lawmakers to take action before it's too late. If these tax cuts expire, middle class Americans will suffer tremendously.
At least Congress has started moving, albeit slowly. The Senate Finance Committee held its first hearing on the issue today for the purpose of discussing how to extend the Bush tax cuts in light of the growing deficit. Additionally, the Heritage Foundation's Brian Riedl had a fantastic op-ed in yesterday's Wall Street Journal entitled "The Bush Tax Cuts and the Deficit Myth." I would encourage all of you to take a look. In his piece, Brian essentially debunks the three primary myths surrounding the Bush tax cuts debate. I'll briefly paraphrase Brian's arguments one-by-one:
Myth #1 – The Bush tax cuts wiped out last decade's budget surpluses.
Brian's Rebuttal – The $5.6 trillion surplus was a miscalculated projection by the Congressional Budget Office (CBO) that did not assume recessions, terrorist attacks, wars, and natural disasters. The projected $5.6 trillion surplus between 2002 and 2011 will more likely be a $6.1 trillion deficit through September 2011. The Bush tax cuts caused just 14% of this $1.2 trillion swing. The bulk of the discrepancy was caused by economic and technical revisions (33%) and new spending (32%).
Myth #2 – The next decade's deficits are the result of the previous administration's profligacy.
Brian's Rebuttal – Big ticket items of the Bush Administration (wars, tax cuts, and the prescription drug program) occurred in the early 2000s, producing a deficit of $161 billion by 2007, not $1 trillion. Mind you, $161 billion is still a significant deficit, but Mr. Obama's assertion is way off here. Trillion-dollar deficits in 2009 were more likely caused by "collapsing revenues from the recession along with stimulus spending."
Myth #3 – Declining revenues are driving up future deficits.
Brian's Rebuttal – FALSE. CBO predicts that tax revenues will rebound to 18.2% of GDP by 2010 even if all Bush tax cuts are extended. It's the government's unbridled spending (which is expected to surge to a peacetime record 26.5% of GDP by 2020) that's causing deficits to soar.
History speaks for itself. Calvin Coolidge's tax rollback helped the 1920s roar. JFK's income tax cuts jump-started the nation's productivity. And Ronald Reagan delivered tax breaks that led to a dramatic boost in job creation. The time is now. Congress must work to make the Bush tax cuts permanent if America is to prosper.