CBO Data Confirm That Extending Tax Cuts Would More Than Double The Size Of Its Own Official Deficit Projections

Publication Date: January 2004

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

Author(s): Robert Greenstein

Research Area: Banking and finance

Keywords: Tax code; Federal budget; National debt; Fiscal future

Type: Report

Abstract:

The new Congressional Budget Office budget projections show deficits of $1.9 trillion over the next ten years, fiscal years 2005 – 2014. As CBO has acknowledged, however, the baseline projections are unrealistically optimistic, since they do not include the costs of continuing various existing policies, such as the recent tax cuts and relief from the Alternative Minimum Tax. Table 1-3 on page 6 of CBO’s new report, along with footnote 13 of the report, show that extending the tax cuts and AMT relief would themselves add another $2.9 trillion to deficits over the next ten years — bringing the total ten-year deficit to $4.8 trillion.

In recent months, four different analyses have been conducted of deficits over the decade from 2004 – 2013 if current policies — such as the tax cuts and AMT relief — are continued. All four analyses — a joint analysis by the business-backed Committee for Economic Development, the Concord Coalition, and the Center on Budget and Policy Priorities (Washington, D.C.), as well as analyses by the Brookings Institution, Goldman Sachs, and Decision Economics (a Wall Street forecasting firm), found deficits of $5 trillion or more.