Climbing Deficit Renews Battle Over Tax Cuts Versus Spending
July 7, 2008 - 7:21 PM
(CNSNews.com) - Upward-creeping deficit estimates have renewed squabbling over whether tax cuts or spending are more to blame.
The Bush administration Office of Management and Budget (OMB) Tuesday announced a revised deficit projection of $455 billion for fiscal year 2003, up from an earlier estimate of $400 billion.
Rep. Charlie Rangel (D-N.Y.), ranking Democrat on the House Ways and Means Committee, blamed tax cuts. "There is no excuse for a $450 billion record deficit this year," said Rangel. "September 11th didn't give us that deficit. The poor people didn't give us that deficit. The war in Iraq didn't even give us that deficit.
"The deficit is the result mainly of massive, irresponsible tax cuts for the richest Americans and the lack of any real plan to boost the economy and put people back to work," Rangel charged.
Americans for Tax Reform, meanwhile, admonished "big-spending liberals" for demonizing tax cuts and blamed the deficit, instead, on spending and a slow economy. According to ATR, fully 68 percent of the FY '03 deficit is due to spending.
OMB has noted that over the past six years, federal spending has grown by 48 percent - almost two times the growth of family income.
The deficit hawk Concord Coalition pounced on both "small government tax policies and big government spending initiatives" from Congress this year.
But other economists downplayed the importance of short-term deficit projections.
"We've never had a slump without being in deficit for a while," said Cato Institute economist Alan Reynolds.
"We spent most of our lives [since the 1980s] chasing... these long-term deficit projections," Reynolds added. "Remember that [Reagan administration OMB director] David Stockman said we had $200 billion deficits as far as the eye could see. Well, his eye couldn't see far enough" because the federal government ran surpluses by the late 1990s.
Reynolds says that tax cuts aren't a factor in present deficits.
"They haven't had a chance to kick in yet, so it's pretty hard to say that actual deficits...are caused by tax cuts," said Reynolds. Even 2001 tax cuts aren't yet fully phased in, he said. "So let's give it a chance."
More to follow