Flawed tax cut

Senate: Improved version still ignores baby boomer problems, squeezes domestic spending.

May 22, 2001

PRESIDENT Bush's sweeping tax-cut plan still suffers from some basic flaws, even as the Senate nears the end of its work on the proposal.

Whether a conference committee of House and Senate leaders ultimately approves the president's more generous tax cuts or the slightly trimmed-down measure thrashed out by Senate Finance Committee Democrats and Republicans, the scope of these tax cuts could do long-term harm.

By returning such a huge sum of money to taxpayers over the next 10 years -- between $1.35 trillion and $1.5 trillion -- Washington would shrink the cash available for domestic spending.

That's before adding in much higher defense expenses for a national missile shield and revamping the military.

What little is left won't be nearly enough to meet today's social needs, much less tomorrow's growing health care crisis, especially as the baby boomer generation starts to reach retirement age.

Worse, that will be just about the time most of these tax cuts kick in fully.

Ten or 15 years from today, as the Social Security system nears its breaking point and the nation's Medicare program is strained to its limits, Washington will have less tax revenue to fix these and other domestic problems.

There's also the dismaying use of long-term budget surplus estimates that may not occur. Who knows what the nation's economy will look in 2011? And yet, Congress and the president are creating immense tax cuts based on rosy 10-year forecasts.

Meanwhile, Washington is creating a situation where 40 million American taxpayers will be forced to pay the alternative minimum tax in 10 years because officials won't fix this flawed law. Instead, officials are phasing out the estate tax, even though that move would primarily aid the very rich.

In their rush to ram through a tax-cut plan, Republicans could wind up passing a bill that looks good in the short run but which creates new, bigger headaches for most of us down the road.

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