Options: Where can the money come from? | ||||
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Three months before 9-11, the Bush administration persuaded enough Democratic senators to join them in adopting tax cuts that would decrease federal tax revenues by $1.35 trillion through 2010. These cuts were said to represent half of the projected surplus – a surplus, however, that was projected prior to the terrorist attacks on New York and Washington, prior to homeland security initiatives, prior to the Iraq War, prior to Medicare’s new prescription drug benefits. The surplus did not materialize. A year later there was a $158 billion deficit; the following year, a $378 billion deficit. Thirteen trillion dollars had been added to the federal government’s long-term obligations. Despite additional defense and homeland security costs the nonpartisan Congressional Budget Office attributed the increasing deficits to tax cuts. Consequently, the federal government has less money to work with than it had under the previous eight presidents. From 2001 through 2010, citizens with incomes in the top one percent (average income of $1.5 million in 2010) will receive 52 percent of the tax cuts (half a trillion dollars). In addition to these cuts, the Bush administration supports eliminating the estate tax and making the 2001 through 2010 tax cuts permanent. This would reduce federal revenues on a permanent basis by 2.5 percent of gross national product (GNP) – a decline larger than the shortfalls in Medicare and Social Security for the next 75 years combined.
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