House Budget Plan Would Swell Deficits By Extending the 2001 and 2003 Tax Cuts and Making Them Permanent

Publication Date: April 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Robert Greenstein; Richard Kogan

Research Area: Banking and finance

Keywords: Federal budget; National debt; Fiscal future; Economic projections

Type: Report

Abstract:

The budget plan that House Budget Committee Chairman Jim Nussle unveiled on March 11 and the Budget Committee approved on March 17 would substantially increase budget deficits. Because the plan’s tax cuts and defense spending increases cost significantly more than the plan’s domestic program cuts would save, the plan makes deficits substantially higher than they otherwise would be.

The plan does show deficits declining between 2004 and 2009, but that is in spite of the plan, not because of it. The deficit decline is largely caused by economic recovery, not by the Committee’s budget. As the adjacent graph and Table 1 show, deficits would be considerably larger under the plan than the deficits the Congressional Budget Office projects under current law.