Keith Hennessey, who led the National Economics Council in the final years of George W. Bush’s presidency, thinks my analysis of the deficits caused by Obama’s presidency should have included two further items: The likely extension of most of the Bush tax cuts, and everything else.
The Bush tax cuts were far and away the most difficult question we faced when preparing the analysis of Obama’s deficits. As I wrote in the original column, the underlying idea was to construct a comprehensive database of every policy Obama himself had passed. That meant creating a baseline that held everything that predated Obama constant. That’s easy enough to do for almost any policy you can think of. Any policy, that is, but the Bush tax cuts.
The problem is that the Bush tax cuts predate Obama but were set to expire on his watch. So is extending the status quo a new policy decision? Or is it sticking to the baseline, and thus budgetarily costless?
I chose to make it a new policy decision. In 2010, Obama chose to extend the Bush tax cuts for two years. Ignoring the $620 billion in debt that that decision incurred was, I thought, unacceptable. But Hennessey wants me to go further: He wants me to assume the extension of most of the Bush tax cuts through 2017
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