To state the obvious, balancing the budget with a tax cut requires deeper spending cuts than balancing the budget without a tax cut. There is no way to escape this fact. Spending cuts are already difficult enough to achieve, particularly in the large entitlement programs that make up most of the budget. Inclusion of tax cuts in the budget plan requires even greater reductions in these and other programs and inevitably leads to the charge that this, that, or another spending cut was used to pay for the tax cut rather than to reduce the deficit. To get out of a hole, you first should stop digging.
Tax cuts make the deficit hole deeper.
They should not be included in a balanced budget plan. What the size of government should be is a legitimate debate. Federal outlays under current law will equal nearly 21 percent of GDP over the same decade, assuming that discretionary spending is permitted to keep pace with inflation. The report being issued today by the Center on Budget and Policy Priorities explains, starting on page 26, how the tax cuts increase the amount by which spending must be cut in order to achieve a balanced budget. By their calculations, and based on Congressional Budget Office projections, spending cuts would have to be 39 percent deeper between now and 2002 if the Senate Republican tax cut plan were adopted, and by deeper still in the years following 2002.