The scheduled expiration in 2008 of a number of tax cuts put in place during Bush's first term has many Senate GOP tax writers looking to the budget reconciliation process to extend these costly measures. If included in the $70 billion reconciliation package, these tax provisions would be protected from a Senate filibuster, yet would add billions of dollars to the national debt through 2010, the five year window the reconciliation bill would cover. Many contend that reauthorization of provisions that benefit the wealthy disproportionately and at the expense of middle- and low- income Americans demonstrates our current Congress' misguided priorities with respect to tax policy. Debate over these provisions has centered around two opposing views of the U.S. economy and federal deficit. So while many believe the federal government is currently flirting with fiscal disaster by eliminating essential revenue in the form of tax cuts while the deficit skyrockets, others maintain that increased revenue coming into the Treasury, as evidenced in the Congressional Budget Office's (CBO) monthly budget review, confirm our economy is sound enough for these tax cuts to be made permanent. A Joint Committee on Taxation report, titled "Present Law and Background Information in Certain Expiring Tax Provisions," notes that the lowered tax rates on capital gains and dividends -- which are extremely contentious, as they almost exclusively benefit higher-income taxpayers -- would cost $20.55 billion to extend through 2010. Notably, 84 percent of total capital gains are reported by taxpayers earning at least $200,000 per year. Extending this provision, therefore, would benefit the highest earners in society, while adding over $20 billion to a debt that will undoubtedly be paid off in the future by raising taxes on low- and middle-income earners. Recognizing they lack the 60 Senate votes to overcome Democratic objections, GOP tax writers in the Senate are looking to extend these provisions this fall in the reconciliation process, which is immune to the filibuster. Tax writers must, however, adhere to a $70 billion spending limit set by Congress in the budget resolution in order to ensure the reconciliation bill will be protected from a filibuster in the Senate. Debate over these expiring provisions, and the likelihood that GOP tax writers will look to extend them through reconciliation, adds to a growing body of proposed tax legislation, including estate tax repeal and alternative minimum tax reform, which eases taxes on the rich at a cost of billions to the rest of the county. The tax cut provisions were first passed in 2001, when economic projections forecasted a budget surplus of $5 trillion for the coming decade. In 2003, the acceleration of those tax cuts added $500 billion to the deficit over ten years. While most of the tax provisions passed in 2001 will expire at the end of 2010, a handful will expire between 2006 and 2008. Four of those, including capital gains and dividends tax rates, were the subject of a June 30 Senate Finance Subcommittee on Taxation and IRS Oversight hearing. Congress may be tempted to provide additional tax breaks for the wealthy in light of expected estimates that the deficit for the current fiscal year, while still substantial, is not as large as once projected. The White House Office of Management and Budget is scheduled to release its midyear assessment on July 13. Last week, the Congressional Budget Office said it expected the annual deficit to be between $325 billion and $350 billion, well below the administration’s projected deficit of $427 billion provided last January. OMB’s revision is likely to be in the same range as that of the CBO. One reason for the improving deficit picture is the increase in revenue from corporate and individual taxes. This is likely to be used as an argument that the tax breaks are working. However, by all accounts, longer-term estimates regarding deficits remain uncertain, if not bleak.