WASHINGTON DC (June 21, 2019) — The House Ways and Means Committee will consider four bills today promising to revive or create several temporary tax breaks that would add roughly $150 billion to the debt over the next ten years if enacted into law temporarily and $710 billion if made permanent.
The bills would revive the tax extenders that expired in 2017 or 2018 or will expire this year; enact temporary two-year expansions of the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), Child and Dependent Care Tax Credit (CDCTC), and exclusion for employer-provided child-care; increase spending on Community Development Block Grants; offer tax-relief for victims of disasters; eliminate the "church parking tax" from the 2017 tax-law; and revert the estate tax to 2017 levels in 2022, instead of 2025, as scheduled under current law.
Unfortunately, the estate-tax change only raises $38 billion over ten years, while the remainder of the bill costs almost four times that, mostly over the first two years. If policymakers extend the temporary deficit-financed tax cuts permanently, we estimate they would cost $710 billion with interest over the next decade, increasing projected debt in 2029 by 2 percent of Gross Domestic Product (GDP). Most of this cost would be on top of the other significant costs from extending current tax and spending policy.
Reviving tax cuts that expired 18 months ago is bad fiscal policy, bad economic policy, and bad tax policy. A dozen groups from the left, right, and center recently joined together to call on Congress not to revive the "Zombie Extenders" that expired over a year and a half ago. No matter the justification for the underlying policy, creating a new set of expiring provisions on top of these would simply double down on this policy failure with more uncertainty, temporary tax-policy, and deficit-financed tax-cuts.
And without offsets, it would worsen an already unsustainable national debt outlook.
