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1 William Ahern, Can Income Tax Hikes Close the Deficit 1 (2010)

handle is hein.taxfoundation/ffcbhxz0001 and id is 1 raw text is: OUNDAION March 12, 2010 No. 217 FISCAL FACT Can Income Tax Hikes Close the Deficit? By William Ahern When David Walker was head of the General Accounting Office, he changed the agency's middle name from Accounting to Accountability, but the concept hasn't caught on in the executive and legislative branches. The commentary pages of the nation's newspapers are filled with foreboding about the nation's finances, urging accountability, but Congress and the President are full steam ahead with their expansive spending plans. As usual, the one number that everyone talks about is the budget deficit, and sober, nonpartisan fiscal experts are agog at the Administration's toleration of previously intolerable deficits. Everyone has a slightly different idea of how high the federal deficit can be in an ordinary year and still be sustainable, but in recent testimony to Congress, Federal Reserve Chairman Bernanke said that the structural deficit was sustainable at 2.5 to 3 percent of GDP.I At no point in the next ten years, according to the Obama Budget, will the deficit ever shrink to as little as 3 percent of GDP. According to the CBO, it will never even get as low as 4 percent.2 And the dire deficit predictions of reliable nonprofit groups like the Pew Trust and Peterson Foundation are even more alarming: the deficit won't even shrink to 5.5 percent of GDP in their analysis.3 'Mind boggling' is the term Martin Sullivan of Tax Analysts uses to describe the tax and spending changes that would have to occur just to get the deficit down to 3 percent of GDP. Our gridlocked, dysfunctional Congress simply cannot bring itself to absorb these types of painful shocks, says Sullivan. Given these unprecedented pressures I believe that within the next 1 Remark made during Q&A after submitting testimony to the House Committee on Financial Services on February 24, 2010. 2 Congressional Budget Office, Preliminary Analysis of the President's Budget Request for 2011, March 5, 2010. 3 Peterson-Pew Commission on Budget Reform, Red Ink Rising A Call to Action to Stem the Mounting Federal Debt, December 2009. William Ahern is director ofpolicy and communications at the Tax Foundation.

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