An editorial in the Washington Post’s business section, by Newsweek’s Wall Street editor Allan Sloan, compares the purported $1.4 trillion 10-year deficit (which assumes that all sunsets actually do sunset) to the much more likely outcome in which Congress extends or makes permanent the various tax cuts currently scheduled to expire between 2008 and 2012. The result of this calculation is a bit sobering:
By law, the budget office has to assume that existing laws expire as planned, and that no new programs are added or subtracted. This report, however, includes numbers that you can use to adjust for political reality. Which I did. First, I counted the $2.4 trillion Social Security surplus, which the Treasury uses to offset its cash shortfall. Then I figured that the last three years of tax cuts will become permanent and that Congress will pass a Medicare prescription-drug package and stop the dreaded alternative minimum tax from hitting 30 million taxpayers. These changes add $3.6 trillion to the deficit. So by the time you’re done, the total projected deficit is more than five times the aforementioned $1.4 trillion. Call it $7.4 trillion. And I’m being generous, assuming we spend nothing in Iraq starting Oct. 1, 2005.