What we miss when we talk about tax cuts

Ezra Klein wrote a really good post, What we miss when we talk about tax cuts. "Every estimate you’ve heard of who is being helped and who is being hurt by the tax cuts proposed by the various Republican presidential campaign is telling you, at best, only half the story. And that’s because these estimates only look at one side of the ledger: who gets the tax cuts. But there’s another side to the ledger: Who pays for them, and how? That side is at least as important as who gets the tax cuts, but it’s almost always ignored."

"William Gale, the TPC’s other director, agrees. ‘One doesn’t know the full distribution of the net benefits or burdens of a tax cut until you know how it is financed.’ The problem is that there’s no way to model the pay-fors. No Republican campaign has explained how they will fund their tax cuts. So there’s no plan to speak of, and thus no plan to analyze."

"Take Romney. His tax cuts add $2-$3 trillion to the cost of the Bush tax cuts. So he needs to find somewhere in the neighborhood of $6-$7 trillion in spending cuts. You can’t get there without slicing deep into the bone of Medicare, Social Security, Medicaid and dozens of other popular programs. It won’t come from spending programs that substantially benefit top earners. That’s because there really aren’t spending programs that substantially benefit top earners. You could means test Social Security and Medicare, but that’s only going to get you so far — and it’s going to be pretty unpopular. "

And here's something I missed: "When Bush proposed most of his tax cuts, the financing came from the surplus. That money could have also gone toward shoring up Social Security, or expanding programs to help low-income Americans, but using it for tax cuts didn’t require, at least in theory, taking benefits away from anybody. Extending the Bush tax cuts, in a time of deficits, does require sharp cuts in benefits."