ITS THE TAX CUTS, STUPID

STILL PUSHING FOR TAX CUTS: CongressDaily reports that despite the IMF report and burgeoning deficits, [Treasury Secretary John] Snow continued the push to make the President's massive tax cuts for the wealthy permanent. He said that cutting spending will become "a part of the mantra" of the Administration. But according to IMF economist Charles Collyns, "even assuming tight spending limits and a sharp rebound in revenues, this would still leave a deficit of around 2% of GDP with the economy operating at full capacity."

ITS THE TAX CUTS, STUPID: Snow's claim that spending cuts will rectify the deficit problem ignores budgetary reality. As a new report from the Center on Budget and Policy Priorities shows, "the fiscal impact of the domestic spending increases remains much smaller than the fiscal impact of the tax cuts." Since 2001, only 5% of increase, costs have been due to domestic discretionary spending, while 28% has been due to increases in defense, homeland security and international affairs. By contrast, the Administration's "tax cuts accounted for 55% of increased costs – a figure that will rise to 57% in 2004."

SPENDING ALREADY CUT TO THE BONE: The CBPP report also notes that "federal spending is currently lower than in every year from 1975 through 1996." In other words, major cuts have already been made – and to make any more would cut even more out of the most basic services (as the White House is already proposing next year). Inadvertently highlighting this situation is the fact that Snow made his pledge for more spending cuts on the two-year anniversary of the No Child Left Behind Act – a bill that the Administration has already underfunded by more than $7 billion.

- From the Center for American Progress