24 Feb 2007 Bad News For The “Tax Cuts Cause Deficits” Crowd

From David Hogberg:

A new report (pdf) out by the GAO looks at how two different simulations affect future budget deficits. The first one assumes that spending continues at the same rate of recent years and the Bush tax cuts are extended. The second assumes that the Bush tax cuts expire after 2010 and that increases in discretionary spending is held to increases in inflation, a rate much lower than recent years.Unfortunately for the tax-cuts-cause-deficits folks, the reports states, “Although the timing of deficits and the resulting debt build up varies depending on the assumptions used, both simulations show that we are on an unsustainable fiscal path.”

Looks like spending is the number one culprit of deficits. And the two biggest culprits, based on numbers in the report, are Social Security, Medicare and Medicaid.

The lesson: Entitlement reform, not tax increases.