Deficits, Schmeficits

http://www.epi.org/publication/deficits-schmeficits-congress-refuses-to-add-to-the-deficit-except-when-giving-tax-breaks-to-big-business/

Congress routinely allows huge packages of nominally temporary tax incentives, loopholes, deductions, and credits to expire, only to revive them over and over again. Collectively known as “tax extenders,” the current group of 55 tax breaks actually expired at the end of 2013. But with only a month left to pass tax legislation, Congress is scrambling to come to a deal to extend these breaks retroactively, so they may apply to 2014 and though the next decade. Many of the extenders are simply giveaways to select groups of corporations and individuals that would not be approved were they to be considered one-by-one.

The figure below shows the 10-year costs of two proposed tax extenders deals. The first deal—nearly reached by the Senate and eventually scuttled by President Obama’s veto threat—would have made some of the breaks permanent, expanded the research and development tax credit, phased out the Renewable Electricity Production Tax Credit, and extended most of the rest through 2015. As shown in the first stacked column, these business friendly tax breaks would total $440 billion over 10 years. The second stacked column looks at one possible consequence of Congress’s likely fallback plan to extend the expired breaks retroactively for 2014 alone. If Congress were to extend all the breaks that expired in 2013 every year for the next decade, it would total $762 billion. These tax packages are then compared to the 10-year costs of three policies that Congress has failed to address, deeming them too expensive and unworthy of an increase in the deficit: a one-year extension of the federal Emergency Unemployment Compensation program, a patch to fill in the Highway Trust Fund’s shortfall for the next decade, and a repeal of the remaining non-defense discretionary sequestration spending cuts.