President George W. Bush's signature tax breaks were never an easy sell. They passed Congress only after Vice President Dick Cheney's tie-breaking vote in the Senate. Critics called them a giveaway to the rich. They cost the U.S. treasury trillions.
A decade later, those tax cuts continue to loom large, becoming central to almost every budget debate in Washington. Whether to maintain the reduced tax rates for wealthy Americans was a question that deadlocked the congressional "super committee" in its search for a plan to cut the government's long-term deficit. The expiration of the tax cuts at the end of next year will be a major issue in 2012 campaign.
The battle over the Bush-era breaks will determine what happens to almost every part of the federal budget - from the spending cuts that are now mandated as a result of the super committee's failure to the long-term outlook for Medicare and other entitlement programs.
"They've been hanging over the budget," said Robert Bixby, executive director of the Concord Coalition, a fiscal watchdog organization. "If you're talking cuts to middle-class programs - like Social Security and Medicare - it becomes really difficult to argue for upper-income tax cuts. ... We have to resolve that tension between entitlement cuts and tax cuts - clearly we're not there."
The Bush-era breaks, approved in 2001 and accelerated in 2003, are a mix of rate cuts and deductions that benefit households across the income spectrum. The most controversial part of the package is the reduction of taxes for upper-income households; those account for ...