How about cutting spending first Alan? I think people would not mind if the govt would be responsible with the money and actually work to reduce the deficit. Instead it will just be for additional spending I expect.
ft.com
Greenspan backs end to Bush tax cuts
By Robin Harding in Washington
Published: July 17 2010 01:37 | Last updated: July 17 2010 01:37
Congress should let all of former president George W. Bush’s 2001 and 2003 tax cuts expire to cut the long-term budget deficit, former Federal Reserve chairman Alan Greenspan has said.
Mr Greenspan’s support helped persuade Congress to pass the tax cuts in 2001 and his comments thrust him into a heated political battle over whether to extend them beyond the end of 2010. “They should follow the law and let them lapse,” Mr Greenspan said in an interview.
The problem is, unless we start to come to grips with this long-term [budget] outlook, we are going to have major problems. I think we misunderstand the momentum of this deficit going forward.”
The Bush cuts lowered income tax rates; created a new 10 per cent tax bracket; raised tax credits for children; and lowered taxes on dividends and capital gains. A “sunset” provision means that all the cuts will expire at the end of this year unless Congress extends them.
Doing so would increase the federal budget deficit by cumulative $2,567bn between 2011 and 2020, according to the Joint Committee on Taxation.
But that would also deepen a growing structural deficit caused by the cost of providing healthcare and social security to an ageing population.
The Congressional Budget Office projects that the national debt will balloon to 87 per cent of gross domestic product by 2020 and 185 per cent by 2035 if the tax cuts are extended and discretionary spending grows in line with the economy.
The Republicans want to extend all the cuts, while most Democrats support proposals by Barack Obama, president, to extend them only for households with incomes below $250,000, lowering the cost to $2,154bn.
Democrats have accused the Republicans of hypocrisy when they block spending on economic stimulus in the name of cutting the deficit.
In particular, they attacked comments by Senator Jon Kyl, the Republican minority whip, who said that the tax cuts should remain in order to spur the economy |
