News Release

Taxes and Triggers


Senior economist at the Economic Policy Institute, Sawicky said today: “Because some members of Congress view President Bush’s proposed tax cut as a budget buster, they would like to make these large tax cuts subject to cancellation or postponement if economic and budget prospects begin to dim. The buzz word for such devices is a ‘trigger.’ There are problems if this scheme works, as well as if it doesn’t. Typically a trigger would aim to enforce arbitrarily tight and unnecessary fiscal criteria such as a surplus target or a debt limitation. If it works it’s bad, since when the economy sinks you want tax cuts and spending increases, not the reverse. If it doesn’t work, it undermines confidence in government, which isn’t all that high to begin with. In addition, an ineffective trigger does little more than facilitate passage of the dubious tax package proposed by President Bush. The solution is to pull the trigger now to reject the Bush proposal.”
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Albelda is professor of economics at the University of Massachusetts at Boston. She said today: “The Bush tax plan is a slap in the face to the millions of Americans who have worked hard over the last decade and not seen their lot improve. In the last decade of economic prosperity, the rich grew richer, the middle class worked harder to stay even, and the poor got low-wage dead-end jobs with few benefits. Tax breaks for the rich won’t stave off a recession. More money in the hands of a few will not stop global corporations from scaling back or laying off thousands of workers; it will make rich people richer. More importantly, a trillion-dollar loss in the public coffers will not build a sound economic base for the future. The money could be spent in far more productive ways for all of us in the form of early education, health care coverage for all, and safe roads, bridges, and school buildings.”
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Professor of economics at Wheaton College in Massachusetts and a contributing editor at Dollars & Sense magazine, Miller said today: “Growing support for triggers that will short-circuit the Bush tax cut if the projected budget surpluses don’t materialize shows that at least some members of Congress are worried about the budgetary implications of the surplus-draining Bush tax cut. But triggers are no cure for the fundamental flaws of the Bush tax proposal: it is too big and too much a giveaway to the rich. The proposed trigger mechanism will come into play only if the surpluses projected by the Congressional Budget Office are not realized. That is a real possibility. One member of Congress described those surplus projections as an exercise in faith-based economics. The projections are based on the CBO’s belief that the economy will avoid a recession this year and average 3 percent growth over the next ten years at the same time that the rapid productivity growth of last few years continues. Those lobbying for a trigger mechanism know that such iffy projections don’t justify a tax cut of the magnitude of the Bush proposal. Nonetheless they have failed to stand up for a smaller, more fiscally-responsible tax cut. Even if the surpluses projected by the CBO hold up, the Bush tax cut is too big. When properly accounted for, it will cost over $2 trillion over the next ten years and drain the projected surpluses once the Social Security and Medicare trust funds are removed.”
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For further information, contact at the Institute for Public Accuracy: Sam Husseini, (202) 347-0020; David Zupan, (541) 484-9167