From Deseret News archives:
Bush budget bleeds red
Major parts immune from slashes: Deficit will grow
In the 1990s, the biggest jump in revenues came from high-income taxpayers who made enormous profits in the stock market bubble that ended in 2000. But Bush's tax cuts of 2001 and 2003 reduced rates on the wealthiest taxpayers and cut in half the taxes on dividends and capital gains, making it all but impossible for revenues to rise at a substantially faster pace than economic growth.
Bush's own projections leave out the cost of rolling back the alternative minimum tax, a parallel tax that is expected to ensnare tens of millions of middle-income households as incomes rise with inflation. Republicans and Democrats both want to prevent such a trap, but a fix would cost about $500 billion over the next 10 years.
"I don't think we are likely to see a repeat of the 1990s," said Douglas Holtz-Eakin, the Republican-appointed director of the Congressional Budget Office. "We can't grow our way out of this."
Administration officials have proposed changes they say would reduce Medicaid spending by $60 billion over 10 years. Bush would cut spending on community development programs, consolidating 18 programs into two and reducing annual outlays from $5.6 billion to $3.7 billion.
Eliminating operating subsidies for Amtrak, which would face intense opposition in Congress, would save about $1.2 billion a year.
In all, Bush has vowed to cut or eliminate 150 government programs. But Republican congressional analysts predicted on Friday that those cuts would be unlikely to save more than $15 billion. And even those savings may not materialize.
Last year, Bush called for cutting or eliminating 65 programs, for a total projected saving of $4.8 billion. But Congress agreed to eliminate only four of those programs, for a savings of less than $200 million.
The other side of Bush's equation higher tax revenues that result from faster growth is unlikely to fill the gap. Despite economic growth and soaring corporate profits last year, federal revenues amounted to only 16.3 percent of the total economy, comparable with levels in the 1950s and far below the level of 21 percent reached during the stock market bubble in 2000.
Comments
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