Wednesday, December 09, 2015

Analysis: Jeb Bush’s Tax Plan Would Cause $8.1 Trillion Budget Hole

Patricia Cohen, NYT

A new analysis of Jeb Bush’s plan to cut most Americans’ tax bills would end up blowing a moon-sized deficit hole into the federal budget with the shortfall reaching $8.1 trillion in the first 10 years.

Although Mr. Bush has promised to slash government spending to make up for the lost revenue, the analysis, released on Tuesday by the Tax Policy Center, a joint initiative from the Brookings Institution and the Urban Institute, concludes that cuts of such magnitude could only be accomplished through sizable – and unpopular — reductions in Social Security, Medicaid and Medicare benefits. Without such “politically infeasible” cuts, the staggering debt would swamp any positive effects that lower tax rates and other features might otherwise have on savings, work and investment.

The glowing promise that the tax cuts would spur so much growth as to make up for any losses is the stuff that dreams are made of, the report concludes.

The sheer size of the revenue loss was the biggest surprise, said Len Burman, director of the Tax Policy Center, who said of the Bush plan that there are a “lot of really good ideas but the numbers don’t seem to add up.”

As Mr. Bush has struggled to gain traction in the crowded Republican field, he has positioned himself as the “serious,” policy-focused candidate compared to his competitors. His detailed tax plan, released in September, was part of that effort. And it is that very seriousness, Mr. Burman said, that caused the Tax Policy Center to choose it as the subject of its first candidate analysis.

(More here.)

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