Last Friday, the Congressional Budget Office (CBO) released an estimate of the cost to the Treasury in 2007 of the temporary 2001 and 2003 tax cuts -- the Economic Growth and Taxpayer Relief Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). With the caveat that "the precise budgetary effects therefore typically can never be known with certainty," and taking account of previous revenue loss estimates, estimated debt-service costs, and estimated short- and medium-term effects on the economy, CBO's analysis found:

• those estimates imply a loss of revenues totaling $165 billion in 2007, with additional debt-service costs of $46 billion, for a total budgetary cost of $211 billion
• the short-term effects of EGTRRA and JGTRRA in stimulating aggregate demand in the economy have largely dissipated by now, and the supply-side effects of those policies are uncertain but are probably small
• including the estimated "feedback" (i.e, supply-side macroeconomic) effects would be a budgetary impact from EGTRRA and JGTRRA (including debt-service costs) of roughly $195 billion to $215 billion in 2007

Interestingly, on the question of whether tax cuts pay for themselves (I forget who still believes this), the CBO analysis said, regarding these two tax cuts: potential macroeconomic feedback effects ... could increase by up to $3 billion or reduce by up to $14 billion the estimated budgetary impact of EGTRRA and JGTRRA in 2007. CBO has performed a valuable service: this analysis may prove helpful in assessing the advisability of extending these tax cuts, when they are due to expire in 2010.