WHEN THE BLUE SMOKE CLEARS

A Tax Cut Without End: A hard look at various elements of the $318 billion tax bill shows a plan that could lose $800 billion in tax revenues over 10 years. (DAVID E. ROSENBAUM, 5/23/03, NY Times)

True, the price tag on the tax bill the House approved this morning is officially only $320 billion over 10 years, barely two-fifths of the $726 billion President Bush proposed in February.

True too, it is even smaller than the $350 billion measure initially passed by the Senate that Mr. Bush ridiculed as "little bitty."

But the $320 billion figure, which is expected to clear the Senate today, is artificial.

No one expects that tax breaks for married couples and a bigger tax credit for children, popular features of the bill, will be allowed to expire after next year. This is what lawmakers call a sunset. It was put into the measure to hold down the 10-year cost.

Nor, barring a political upheaval that puts Democrats in the White House and in control of Congress, is it likely that the lower tax rates on dividends and capital gains will be allowed to expire after 2008, another sunset in the bill.

If these elements of the tax cut are calculated on a 10-year basis, the cost in lost revenue stands to be over $800 billion, more than what the president proposed, according to the first analysis by the Center on Budget and Policy Priority, a liberal research institute.

More important, the tax reduction this year and next year under the Congressional agreement is significantly larger than what the president originally proposed.

The Congressional tax staff estimated that the agreement would lead to a tax cut of $61 billion in the 2003 fiscal year, which ends on Sept. 30, and $149 billion in 2004.

The Congressional Budget Office reported that the president's plan would have lowered taxes by $35 billion in 2003 and $117 billion in 2004.

When the fiscal "hawks" win, we all win. If George Voinovich had held out a few days longer we might have hit $1 Trillion. Posted by Orrin Judd at May 23, 2003 8:49 AM