“My understanding is that the Bush Tax Cuts were supposed to be Temporary, there was an end date, and that end Date was determined specifically by a actuarial prediction based upon a ratio projection: number of jobs possibly created/outside length of time the US could stay solvent with reduced tax revenues.
Now, if the Bush Economic Advisers themselves, planned this termination of the Tax Cuts with the Economy in mind, WTF is wrong with the Current Republican Leaders that they are overlooking the very necessity to have a tax-cut end-date?”
I think it is important to remember that the 10 year time limit on the Bush tax cuts was an entirely cynical political ploy, for at least three reasons.
First, the 10 year expiration date allowed Republicans to treat the tax cut plan as a matter of budget reconciliation—the exact tool that Republicans were outraged at the Democrats for using to make health care reform happen last year. Technically, budget reconciliation measures can only be in force for 10 years, unlike regular laws, which are permanent until overturned or amended. However, budget reconciliation acts are not subject to filibuster, and so only require a simple majority to pass. Republicans used this tool in 2001 to pass the tax cuts, just as Democrats used it to reform health care.
Second, the 10 year automatic expiration allowed the advocates of the tax cuts to claim that they would likely not have a profound effect on the long-term US deficit. This is because the long-term costs for the United States lie in entitlements like Social Security and Medicare, and it would not be until after 2011 that the Baby Boom generation would really be retiring in huge numbers. Hence we would only “need” the money that was forgone under the Bush tax cuts after 2011. Add that money back in after 2011, and the projected deficits would go down in the long term.
It didn’t work quite as expected, because the financial meltdown and Great Recession radically depressed the economy, and hence economic growth, suppressing tax collections. But it was the mathematical reason for the 10 year limit.
Third, it was perfectly clear 10 years ago that it would be very contentious, politically, to let the Bush tax cuts “expire.” It was perfectly clear that, in 2011 (or 2010, as it happened), Republicans would scream that failure to extend the Bush tax cuts would mean imposing the giantest most horrificest and business crushingest tax increases on “the American people” in US history. In 2001, Republicans hoped they would be able to extend the tax cuts going forward after 10 years; Democrats hoped that they would have enough to votes to let the cuts expire. Both parties kicked the can down the road 10 years. The Republicans were on the winning side of that decision.
So, in the end, I don’t think the Bush tax cuts were scheduled to expire in 10 years to help future Americans pay for things like their parents’ and grandparents’ retirements and health care. I think they were scheduled to expire in ten years in the cynical hope that they would keep being extended afterwards.
That’s what I thought 10 years ago, and I have seen nothing to the contrary to change my mind since.