Capital Commerce

Here are 400 billion reasons President Bush's 2001and 2003 tax cuts may not see the next decade of the 21st century. The five-year federal budget proposed by Senate Democrats last week lets the reductions stay in place after their current 2010 expiration date–if backers can come up with $400 billion to pay for them in 2011 and 2012. Extending them to 2017 would "cost" $1.8 trillion. (This sort of static analysis oddly assumes that taxes–whether higher or lower–have no economic impact.) Now given that the current Congress is having trouble coming up with $40 billion-$50 billion for a temporary fix to the alternative minimum tax, finding a spare $200 billion a year seems like a tall order indeed. "After 2008, the default budget position is going to be higher taxes," concluded Tom Gallagher, a veteran political analyst at International Strategy & Investment Group, in a recent chat.

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