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Warren Fiske
By Warren Fiske November 11, 2010

Tim Kaine says Republican effort to extend Bush tax cuts would double deficit

There’s a heavy cost to extending the Bush-era tax cuts, according to Tim Kaine, chairman of the Democratic National Committee.

"What the Republicans want to do is extend these tax cuts, make them permanent to the wealthy, and the CBO (Congressional Budget Office)  has estimated that would double the deficit projections going forward for the next couple of decades," Kaine, a former Virginia governor, said during a CNN interview.

Double the deficit? We decided to check.

First, a word of background. The tax cuts, enacted by Congress in 2001 and 2003, lowered rates on income, capital gains and dividends and:

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  • eventually eliminated the estate tax;
  • eased burdens on married couples, parents and the working poor;
  • increased tax credits for retirement savings and education.

The cuts are set to expire at the end of the year unless Congress extends them.

A spokesman for the Democratic National Committee said Kaine based on his statement on a CBO report released in September.

We dug up the study and found Kaine was correct. "A permanent extension of all those tax cuts without future increases in taxes or reductions in federal spending would roughly double the projected budget deficit in 2020," the report said.

The CBO projects the 2020 deficit -- based on an assumption that the tax cuts will not be extended -- at $685 billion.

Republican congressional leaders want to make the tax cuts permanent. "This is from a Republican Party that’s been griping about deficits," Kaine said on CNN.

But by bringing up deficits, Kaine also sawed at the branch President Obama and many other Democrats have perched on during the tax debate. They’ve wanted to eliminate that tax cuts for the "wealthy," defined as families with annual incomes exceeding $250,000 and individuals who make more than $200,000. Democrats have supported extending the reductions to families and individuals beneath those thresholds.

Here’s the rub: Eliminating tax cuts for the wealthy and keeping them for everyone else doesn’t save big money. The Democratic tax plan would leave a projected deficit in 2020 that would be "roughly three-quarters to four-fifths" as high as that caused by the GOP plan to eliminate all the levies, according to the same CBO report cited by Kaine.

Kaine didn’t mention this on CNN.

"What he said is factually correct," said Roberton Williams, a senior fellow at the Tax Policy Center in Washington. "What he didn’t say is that the Democratic plan to extend taxes for 98 percent of the population shoots almost as big a hole in the budget as the Republican plan."

We agree that the buyer must beware when browsing political statements. Kaine is correct in saying that the CBO estimates the Republican tax plan would double deficit in 2020. But he omits an important fact: The Democratic plan would would increase the deficit by almost as much.

As a result, we rate Kaine’s statement Mostly True. 

Our Sources

Tim Kaine interview, CNN,Sept. 19,2010

Congressional Budget Office, The Economic Outlook and Fiscal Policy Choices, Sept. 28, 2010

Congressional Budget Office, Baseline Budget Projections, August, 2010

E-Mail interview with Alec Gerlach, regional press secretary, Democratic National Committee

Interview with Roberton Williams, senior fellow, Tax Policy Center

Interview with William Ahern, director of policy and communications, Tax Foundation

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Tim Kaine says Republican effort to extend Bush tax cuts would double deficit

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