Why Congress Should Let the Bush Tax Cuts Expire - Newsweek
The tax cuts could have been made permanent or extended at some point before now. Alternatively, the folks who ran fiscal policy from 2001 through 2008—the Republican White House and a Congress that was controlled for most of that period by Republicans—could have created the conditions that would have made it possible to extend the tax cuts or make them permanent. But they didn't. Instead of running balanced budgets, they appropriated hundreds of billions of dollars to fight two wars, created an expensive, open-ended entitlement without a funding mechanism (Medicare prescription drug coverage), and increased discretionary spending. Oh, and their failures of oversight, regulation, and management led to expensive, deficit-enhancing bailouts.
...President Obama's proposal to extend the tax cuts for those making less than $250,000 per year will add $3.2 trillion to the debt. But as the Congressional Budget Office noted, extending them all will add $3.9 trillion in debt. Now, advocating tax cuts without specifying spending cuts (and, no, John Boehner, saying you want to roll back spending to 2008 levels doesn't count) means you're advocating a huge increase in new debt creation. It's sad to say, but it's nearly impossible to find a Democrat or Republican who can speak seriously about how we can align revenues with expenditures. (And, no, Rep. Paul Ryan, your much-discussed "road map" doesn't count, since it cuts taxes on the rich but doesn't lower deficits over the long term.)
The bold and confident assertions made about the links between tax rates and economic growth, market performance, and prosperity are almost certainly wrong. Turn on CNBC or look at the Wall Street Journal op-ed page these days, and you'll learn that we must keep tax rates on capital gains, dividends, and income precisely where they are because shifting them to different levels will retard economic growth. Keep this in mind: The people who designed the current, unsustainable tax system promised us that lower marginal rates, and lower taxes on capital and dividends, would boost the economy, promote investment, create jobs, spur market performance, and raise everybody's income. They were wrong. (It's no coincidence that these same people also warned us that raising taxes in 1993 would kill market returns and the economy. They were wrong then, too. They're pretty much always wrong.)