In addition to being unfair, it is also economically unwise because it jeopardizes Medicare, it fails to strengthen Social Security, and it risks higher interest rates. Because of the uncertainty of budget surplus projections and also because we should normally reserve tax cuts for periods of economic slowdown. The implication, in his words, has been pretty clear over these last few months, which is that a large tax cut would cause the Fed to increase interest rates. For the average middle-income taxpayer, a rise in interest rates means larger mortgage payments, larger loan and credit card payments, larger payments on that automobile, and that would far outweigh the small share of the benefits from the tax cut which that average taxpayer might receive. The tax program that is being offered to us is also based on unrealistic projections.
Projections are always risky.
We have seen many federal budget estimates, and we know well that as quickly as these surpluses appear, they can disappear. The estimates of both the Congressional Budget Office and the Office of Management and Budget have frequently been far off the mark in recent years and that is not their fault. They have a difficult task to do. Forecasting the performance of the economy, particularly over the course of several years, is more art than science, and there is a lot of guesswork in it. So there has been a change of over 100 percent in the projection of the surplus in less than a year.