Yesterday the Senate approved yet another tax cut targeted to the very wealthy; the House having passed it earlier this week, on what Speaker Denny Hastert fatuously called “a day of celebration for the American people.” (For a dyspeptic view of this development and its broader meaning, check out yesterday’s New Dem Dispatch). It was, of course, styled as an effort to avoid a “tax increase,” and its cost, of course, was disguised through the usual accounting tricks (most notably using a new Roth IRA rollover provision to attract taxable deposits, even though the long-term impact on revenues will be negative). And Republican leaders, of course, fully intend to enact another tax cut later this year, in part because they had to break up the package to keep it within budget limits and avoid a filibuster, but mostly because they want to hand out some more cash-candy to Republican constituencies just before the November elections.But there’s a growing sense that the tax-cut parade is coming to an end, even if the GOP manages to hold onto Congress this November. The biggest fans of tax-cuts-world-without-end are conservatives who now understand their solons have no interest in cutting the spending necessary to keep the budget from drowning in red ink. And even in the financial community, some of the beneficiaries of the drive to exempt wealth from federal taxation are getting very nervous about the borrowing involved. As the Washington Post noted this morning:
[W]ith interest rates rising, the dollar falling and the budget deficit stuck at around $300 billion, tax experts warn that the tax code Bush has transformed may not survive to its Dec. 31, 2010, expiration date and that Congress may have to step in again because tax revenue will not meet all of the government’s needs. “We have a train wreck waiting to happen,” said C. Clint Stretch, director of tax policy at the accounting giant Deloitte & Touche.
So like bandits hauling off a final few items before the cops arrive, GOP congressional leaders are conducting what may prove to be their final raids on the Treasury. But the rest of us will be paying for them for a long, long time.