House Pension Legislation Makes Some Cuts Permanent

The pension legislation passed by the House would make some of the 2001 tax cuts permanent without offsetting their costs. These tax cuts include increases in IRA and 401(k) contribution limits and the creation of the “saver’s credit. According to this report, this move would cost about $30 billion between 2006-2015. Most of the costs would occur from 2011 on. Not offsetting these costs, as the Center on Budget and Policy Priorities puts it, would make it harder to reach eventual agreement on a fiscally responsible, comprehensive approach to the nation’s looming budget problems. A comprehensive approach will involve some “give” on both spending and revenues, but that is likely to be harder to achieve if the tax cuts already are locked in on a permanent basis.
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