Are Democrats correct when they say the tax cut is causing the federal budget to go into deficit?
Not entirely. The tax cut in 2001 and 2002 causes a total revenue loss of about $111 billion, roughly a quarter of the estimated reduction in budget surpluses for those years. The economic recession, worsened by the Sept. 11 terror attacks and costs of the ensuing war, is the biggest estimated drain on government revenue in these early years. Tax cuts scheduled under the new law to take effect in later years are much more costly, totaling more than $931 billion from 2006 to 2011 not counting interest expenses. Over the entire decade, budget analysts estimate the tax cut accounts for about half of the projected reduction in the surplus. If the budget outlook worsens as many expect, the tax cut’s long-term effect would become greater. Which tax cuts are yet to come? Mainly reductions in the upper income tax rates in 2004 and 2006, along with a gradually bigger child tax credit, relief from the income tax “marriage penalty” and elimination of the estate tax. Some budget analysts say taxpa
