Today, the Congressional Budget Office issued its ten-year budget outlook. According to their report, the 2006 federal budget deficit will be at least $337 billion, and deficits from 2006–15 will total $1.2 trillion. If we continue with President Bush’s economic policies the actual deficits will be much, much higher.
First, the CBO numbers exclude tens of billions of dollars in expected spending for Iraq and Katrina. Second, the long-term figures assume President Bush’s tax cuts, which overwhelming benefited the wealthy, will expire at the end of the decade.
To understand how tax cut extensions would ruin our long-term budget picture, look no further than the CBO report. Below are three important points from the report:
1) CBO assumes Bush tax cuts will expire after 2010:”By statute, CBO’s baseline must project the future paths of federal spending and revenues under current laws and policies.”
2) Little chance of tax cuts expiring:”The assumption that tax provisions will expire as scheduled has a significant impact on CBO’s projections. Many of the expiring provisions were enacted many years ago but are routinely extended, and most reduce [tax] receipts.”
3) Effects on the budget would be severe:”[I]f all of the tax provisions that are set to expire over the next 10 years were extended, the budget outlook for 2016 would change from a surplus of $67 billion to a deficit of $584 billion”.
To learn more about budget issues check out the new Center for American Progress budget blog.