The Congressional Research Service posted a report examining what affect the looming expiration of the Bush tax cuts would have on the economy. According to The Daily Dish, extending these breaks forever would be fiscally insane.
A recent study by Alan Auerbach and William Gale projects that tax revenue would have to be permanently increased by 4.6% of GDP just to keep the debt-to-GDP ratio at the current level over the next 75 years under the current law scenario (i.e., allow the Bush tax cuts to expire). They refer to this as a fiscal gap of 4.6%.
If the Bush tax cuts were permanently extended the estimated fiscal gap rises to 7.2%. They project that by 2085, debt as a percentage of GDP would approach 600% under the current law scenario and 900% if the Bush tax cuts are extended—extraordinary levels that are unprecedented for the U.S.
