Fiscal Cliff Deal Would Add Trillions to Deficit
Instead of deficit reduction, it appears the fiscal cliff deal that was passed in the Senate early Tuesday morning would only add to the federal government’s budget problems. According to the nonpartisan Congressional Budget Office, the deal would cost the nation nearly $4 trillion over the next decade.
“But that’s relative to where deficits would otherwise be if Congress were to let all the Bush tax cuts expire and keep much, if not all, of the other tax hikes and spending cuts under the fiscal cliff in place,” according to CNN Money. “Under that scenario, only $2.88 trillion would be added to the debt over the next decade.”
The CBO attributes much of the price tag to lost revenues and refunds on tax credits.
The three-page table was released Tuesday even as House Republicans were meeting behind closed doors on the deal. And while the numbers can be understood only with some context, they could also spook deficit-conscious conservatives into demanding more spending cuts.
…the long range estimates don’t reflect the fact that the deal now is only the first step toward establishing a new baseline from which the White House and Republicans hope to work next year to carry out tax reform. At one level, tax cuts were being thrown into the mix — impacting the Alternative Minimum Tax for example — in order to influence this future baseline without regard to the deficit results.
Nonetheless, the CBO numbers are big, and the table reflects the scope of the deficit problem that the nation faces — and that isn’t greatly improved upon in the current deal.
— Posted by Tracy Bloom.