The rhetoric and reporting on the 2001 and 2003 tax cuts has often been confusing, and sometimes misleading. However, the lead from today’s Washington Post article by Lori Montgomery has to be read to be believed. She casts the debate as a struggle between Republicans who want to “deprive” the federal government of its revenue — which doesn’t actually exist:
Even as they hammer Democrats for running up record budget deficits, Senate Republicans are rolling out a plan to permanently extend an array of expiring tax breaks that would deprive the Treasury of more than $4 trillion over the next decade, nearly doubling projected deficits over that period unless dramatic spending cuts are made.
The measure, introduced by Senate Minority Leader Mitch McConnell (R-Ky.) this week, would permanently extend the George W. Bush-era income tax cuts that benefit virtually every U.S. taxpayer, rein in the alternative minimum tax and limit the estate tax to estates worth more than $5 million for individuals or $10 million for couples.
Aides to McConnell said they have yet to receive a cost estimate for the measure. But the nonpartisan Congressional Budget Office recently forecast that a similar, slightly more expensive package that includes a full repeal of the estate tax would force the nation to borrow an additional $3.9 trillion over the next decade and increase interest payments on the national debt by $950 billion. That’s more than four times the projected deficit impact of President Obama’s health-care overhaul and stimulus package combined.
Huh? The extensions would simply continue the status quo, not deduct revenue the government receives now. These are not tax cuts, as the bill doesn’t change the current tax rates at all. The bill would instead prevent a massive $4 trillion tax increase.
The extensions don’t force the government to borrow an additional $4 trillion over the next decade, either. Instead, they could simply cut spending, an option that apparently escapes the imagination of Ms. Montgomery. A freeze at the spending level of the last Republican Congress budget of $2.77 trillion per year (FY2007) could save more than a trillion dollars each year over the next decade. A freeze at the level suggested by John Boehner (FY2008, $3.1 trillion) would save more than $700 billion per year, almost twice as much as Montgomery claims we would need to borrow because of the tax extensions.
The WaPo is hardly alone in its skewed reporting. John Merline, the opinions editor for AOL News, says that the reporting on this issue has been filled with misrepresentations like Montgomery’s:
If all you did is read the headlines or half-listen to President Barack Obama talk, you’d no doubt think there was a big income tax cut in the works. …
So, for anyone who might be a little confused by all this, here’s a news flash: No one is getting a tax cut. There will be no tax relief for anyone. Zip. Zero. Nada. …
It may be too much to ask for politicians to be honest about what’s going on. But journalists (present company included) certainly shouldn’t be aiding and abetting it.
What we will be getting is a huge tax increase if Congress continues to punt. One might think that the press would be interested in reporting that, as it will sharply impact the economy in the years to come as government takes a big bite out of what is left of disposable income and investment capital. Unfortunately, news outlets like the Washington Post will instead report that nothing at all has changed, Winston.