CBPP on the Budget and Tax Cuts
As the GOP argues that Congress is cutting spending to reduce the deficit, Robert Greenstein, Joel Friedman, and Aviva Aron-Dine present evidence that demonstrate: (1) their actions will actually increase the deficit and (2) their actions are just another example of reverse Robin Hood-ism:
Sometime early next year, the House of Representatives is expected to vote on the budget reconciliation legislation that the Senate passed on December 21 and the House passed in a slightly different version on December 19. That legislation would make significant cuts in a number of programs serving low- and moderate-income families and individuals, including Medicaid, child support enforcement, and student loans.
Supporters of the legislation defend the cuts as “tough choices” that need to be made because of large and growing budget deficits. These claims are undercut by the fact that, in the last six weeks, the House has passed four tax-cut bills that together cost more than twice what the budget reconciliation bill saves. The claims are further undermined by Congress’s unwillingness to rethink any previously enacted tax cuts as part of its supposed reevaluation of priorities in light of deficits.
In particular, Congress has chosen to allow two tax cuts that exclusively benefit high-income households – primarily millionaires – to begin taking effect on January 1, 2006. By 2010, these tax cuts will eliminate two current provisions of the tax code that limit the value of the personal exemptions and itemized deductions that people at high income levels can take.