So, many in the Republican Party are going out and saying letting the Bush Tax Cuts (enacted in 2001/2003) expire in December of this year will undermine any progress made in economic recovery in America. They say this because those who would be affected the most by the expired tax cuts, upper-high income Americans, are one of the big keys to improving the economy..While sounding like a valid point, allowing the Bush Tax Cuts to continue (and possibly be made permanent) strongly contradicts a major GOP battle cry this election year: The Deficit.
First off, indeed many Small Businesses in American do classify themselves as individuals when it comes to tax time and they will experience a tax increase if the Bush Tax Cuts are allowed to expire. Also true is that many economists agree that Small Businesses are a major factor in any possible economic recovery. So logically, allowing the Bush Tax Cuts to expire would possibly hurt or slow down such a recovery...
Second, Democrats have blamed these Tax Cuts for far too much as of late. Yes they are a large component of the current Federal Deficit but they are hardly the only major factor. The wars in Iraq and Afghanistan, TARP, the Stimulus all have affected and greatly increased to the Federal Deficit and to bash the Bush Tax Cuts are being the most destructive of these is short-sighted and hypocritical.
However, there is something the Republicans don't really want to talk about when one discusses the Bush Tax Cuts..the Deficit.
Most economists estimate the Bush Tax Cuts have cost the Federal Government well over $1 Trillion in lost revenue (not taking into account side-effects on other sections of the economy) already. Even more frightening, the non-partisan Pew Charitable Trusts in May of this year estimated that if the Bush Tax Cuts were made permanent for all taxpayers, they would add $3.2 trillion in the next decade...3.2 Trillion Dollars..Thats more than twice the current Federal Deficit. That alone should make any supposed Fiscally conservative person shutter..but it gets better! In 2007, the Congressional Budget Office estimated that if the Bush Tax Cuts were allowed to expired, they would reduce the annual Federal deficit by $200-300 billion..ANNUALLY.
Historically, Republicans will tell you tax cuts can fix practically any economic woes...And they are sometimes a fairly good tactic, but many economists will also tell you tax cuts rarely if ever pay for themselves (something Republicans demand any spending bill should do). And while it's possible allowing these tax cuts to expire may affect the speed of a prospective economic recovery, I personally believe the obvious possible reduction of the Federal Deficit outweighs this and Republicans need to decide whether they are really worried about the deficit and allow the Tax cuts to expire or at least modify them, or just using it for political gain. I strongly suspect the later, especially when one studies their track record with the economy in the last few decades. They claim they have changed and are ready to make cuts and reduce the deficit by almost all means necessary..but is 4 years really enough time for the GOP to change its fiscal stripes? We shall see...