Saturday, February 25, 2006

Tax cuts; Katrina Related and Nationwide

So let me get this straight: tax cuts don't contribute to the federal deficit because they pay for themselves. Unless you're talking about tax cuts targetted towared Katrina Reconstruction; in that case, it's money out of the federal budget. Seems like an obvious contradiction.

I don't claim any great originality or insight for pointing that out. I'm sure we've all mentioned it in passing, but I've always considered it a minor matter or even just a glib conversational point. But we're talking about making hundreds of billions, actually trillions, of dollars in tax cuts permanent because they pay for themselves. Yet we're told that 10-20 billion dollars in Katrina related tax cuts are money that rest of the nation is spending on the Gulf Coast. Like I said, at first glance it seems like a clever conversational point at best. Actually, though, pointing out a trillion dollar contradiction is a lot more tham bon mot. Either tax cuts take money out of the national treasury or they don't. There's been linkage between Katrina and the tax cut debate, but I don't believe that that particular point has been made very forcefully.

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