In what has become somewhat of an annual ritual, Congress yesterday voted to raise the debt limit once again””this time to $8.97 trillion (yes that’s with a T). How can we make sure the debt will absolutely explode? Granting President Bush’s wish to make the tax cuts permanent.
This year’s projected $423 billion deficit sounds (and is) enormous, but the President’s tax cuts are yet to take full effect. By early next decade, the tax cuts alone will add over $400 billion a year to the national debt, when you count associated interest.
One of the biggest culprits in this looming fiscal train wreck: permanent repeal of the estate tax. According to the latest estimates, repealing the estate tax will cost over three quarters of a trillion dollars in the next decade (2012-2021) even without additional interest costs.
Knowing it’s an enormous price tag for something that will only benefit the wealthiest 0.5% of estates, some Senators have started shopping alleged “compromises.” Unfortunately, these compromises are about as bad as repeal. One discussed by Senate Finance Chairman Chuck Grassley would cost nearly 85% as much as eliminating the tax altogether.
It will take a lot of work to get the country back the right fiscal track, but ensuring responsible reform of the estate tax wins out over a reckless giveaway to our wealthiest estates is a good start.
– Josh Lynn