New budget projections make tax cut look more likely
WASHINGTON (CNN) -- Amid signs of a slowing economy, the push is already on for President-elect George W. Bush's tax cut.
"It seems one of the ways to encourage consumption, to enhance consumer confidence, will be to let people have some of their own money back," Bush told reporters Friday.
Now, the Congressional Budget Office is expected to project the budget surplus could grow to as much as $6 trillion over the next 10 years.
The extra $1.4 trillion over the CBO's previous projections is adding fuel to the tax cut fire from both sides of the aisle.
"There is no question with the surplus going up to $6 trillion or more over the next decade that we're going to have a tax cut in 2001-2002," said Rep. Robert Matsui, D-California, a member of the House Ways and Means Committee.
Over the next 10 years, budget officials predict the economy will grow at an annual rate of 3 percent. That could add as much as $1 trillion to the surplus.
"One of the big reasons people were saying we shouldn't have a tax cut is because we couldn't afford it, and suddenly a lot of additional money has just been found," said Stan Collender of the Federal Budget Consulting Group.
"The problem is you've got to ask yourself whether these new economic forecasts are real and whether they're likely to be realized," Collender said.
Congressional budget officials, however, do factor a recession into their 10-year forecast. And a tax cut.
President-elect Bush argues a tax cut could help head off a recession. It could also head off a political risk to his own party.
"If Bush fails to get the tax cut passed this year and then the economy slows down, the Republicans, I think, will pay a price at the polls in 2002," said Steven Moore of the Cato Institute.
The burgeoning surplus isn't just raising expectations for a tax cut. It is also opening the debate for Social Security reform, paying down the debt and new spending. But with a House and Senate so closely divided, not every politician will have every dream fulfilled this holiday season.
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