TheCongressional Budget Office released its new economic forecast today. It predicts painfully slow growth, unemployment at 8.5 percent at the end of 2012. The CBO also says we’re in for big deficits, and provides this handy chart for why. Note the persistent and large chunk of light blue – that’s lost revenue. The footnote explains:
“Extend Tax Policies” reflects the following policy assumptions: Most of the provisions in the 2010 tax act that were originally enacted in 2001, 2003, 2009, and 2010 are extended (instead of being allowed to expire on December 31, 2012, as scheduled), and the alternative minimum tax is indexed for inflation.
Some of those provisions were part of the economic stimulus, like the payroll tax break that was part of the stimulus and gave workers more money in their weekly paychecks. That’s the tax Republicans now say workers should start paying again. It’s worth about $120 billion a year.