The GOP’s tax delusion
By Ezra Klein,
WashPost
Monday, July 11, 4:51 PM
The Bush tax cuts were not supposed to last forever. Alan Greenspan, whose oracular endorsement was perhaps the single most decisive event in their passage, made it very clear that they were a temporary solution to a temporary surplus. “Recent data significantly raise the probability that sufficient resources will be available to undertake both debt reduction and surplus-lowering policy initiatives,” Greenspan said in 2001.
Okay, so maybe he wasn’t so clear. But everyone knew what he meant. And, broadly speaking, they agreed. We had a big surplus. It was time to do something with it. Brad DeLong, a former Clinton administration official and an economist at the University of California at Berkeley, didn’t want to see the surplus spent on tax cuts. He wanted to see it spent on public investments. “Nevertheless,” he wrote in 2001, “it is hard to disagree with Greenspan’s position that — if our future economic growth is as bright as appears likely— it will be time by the middle of this decade to do something to drastically cut the government’s surpluses.”
Ten years later, there is no surplus. It turned out that our future economic growth wasn’t as bright as had seemed likely in 2001. That, plus $2 trillion in tax cuts and a few trillion more in wars and assorted spending, left us with large and growing deficits.
The next step, then, is obvious. The Bush tax cuts were scheduled to expire after 10 years. Congress extended them for two years in 2010, as you don’t want a massive tax increase in the middle of a deep recession. But as we look toward our future deficits, it seems we’ll need to let at least some of the tax cuts expire. Indeed, Greenspan now says we should let all of the Bush tax cuts expire.
(More here.)
WashPost
Monday, July 11, 4:51 PM
The Bush tax cuts were not supposed to last forever. Alan Greenspan, whose oracular endorsement was perhaps the single most decisive event in their passage, made it very clear that they were a temporary solution to a temporary surplus. “Recent data significantly raise the probability that sufficient resources will be available to undertake both debt reduction and surplus-lowering policy initiatives,” Greenspan said in 2001.
Okay, so maybe he wasn’t so clear. But everyone knew what he meant. And, broadly speaking, they agreed. We had a big surplus. It was time to do something with it. Brad DeLong, a former Clinton administration official and an economist at the University of California at Berkeley, didn’t want to see the surplus spent on tax cuts. He wanted to see it spent on public investments. “Nevertheless,” he wrote in 2001, “it is hard to disagree with Greenspan’s position that — if our future economic growth is as bright as appears likely— it will be time by the middle of this decade to do something to drastically cut the government’s surpluses.”
Ten years later, there is no surplus. It turned out that our future economic growth wasn’t as bright as had seemed likely in 2001. That, plus $2 trillion in tax cuts and a few trillion more in wars and assorted spending, left us with large and growing deficits.
The next step, then, is obvious. The Bush tax cuts were scheduled to expire after 10 years. Congress extended them for two years in 2010, as you don’t want a massive tax increase in the middle of a deep recession. But as we look toward our future deficits, it seems we’ll need to let at least some of the tax cuts expire. Indeed, Greenspan now says we should let all of the Bush tax cuts expire.
(More here.)
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