* Hugh Culverhouse Eminent Scholar in Taxation, University of Florida, Frederick G. Levin College of Law.
1 See generally Daniel N. Shaviro, Reckless Disregard: The Bush Administration’s Policy of Cutting Taxes in the Face of an Enormous Fiscal Gap, 45 B.C. L. Rev. 1285 (2004).
2 Wayne Angell, The Rubin Recession, Wall. St. J., Mar. 25, 2004, at A16. My reliance on a Wall Street Journal op-ed piece is evidence, if any be needed, of my amateur status in these matters.
3 Id.
4 See id.
5 Id.
6 See id.
7 Angell, supra note 2, at A16.
8 Id.
9 William G. Gale & Peter R. Orszag, Should the President’s Tax Cuts Be Made Permanent? 102 Tax Notes 1277, 1283–85 (2004).
10 Id.
11 Shaviro, supra note 1, at 1289.
12 U.S. Dep’t of the Treasury et al., Report on Foreign Holdings of U.S. Securities as of June 30, 2002, at 5 tbl.2 (Jan. 2004), available at http://www.ustreas.gov/tic/
shl2002r.pdf.
13 Greg Ip, Could Overseas Financing Hurt the U.S.?, Wall St. J., Apr. 30, 2004, at A2 (“Foreign central banks, led by China’s and Japan’s, now hold close to $1 trillion of Treasury bonds and bills, almost a quarter of publicly held U.S. debt. That serves their economic interest, but it also gives them a potential financial lever.”).
14 Org. for Econ. Co-operation & Dev., Economic Survey: United States 2004: Ensuring Fiscal Sustainability and Budgetary Discipline, at http://www.oecd.org/
document/11/0,2340,en_2649_201185_31458443_1_1_1_1,00.html (last visited Oct. 15, 2004) (presenting data from Org. for Econ. Co-operation & Dev., 2004/7 OECD Econ. Survs. United States 10–12 (May 2004)).
15 Id.
16 Id.
17 Nicoletta Batini, How Will the U.S. Budget Deficit Affect the Rest of the World?, in World Economic Outlook April 2004: Advancing Structural Reform 67 (Int’l Monetary Fund ed., 2004), available at http://www.imf.org/external/pubs/ft/weo/2004/01/pdf/
chapter2.pdf.
18 Id. at 64.
19 Foreign Trade Div., U.S. Census Bureau, U.S. Trade in Goods and Service— Balance of Payments (BOP) Basis (June 14, 2004), available at http://www.census.gov/
foreign-trade/statistics/historical/gands.pdf.
20 Id.
21 See U.S. Dep’t of the Treasury et al., supra note 12, at 3; Carol C. Bertaut & William L. Griever, Recent Developments in Cross-Border Investment in Securities, 90 Fed. Res. Bull. 19, 27 tbl.4 (2004), available at http://www.federalreserve.gov/pubs/bulletin/2004/
winter04_if.pdf (last updated Sept. 20, 2004).
22 U.S. Dep’t of the Treasury et al., supra note 12, at 3.
23 Id. at 5.
24 See Shaviro, supra note 1, at 1299.
25 Bd. of Trs., Fed. Old-Age & Survivors Ins. & Disability Ins. Trust Funds, The 2004 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds 2 (2004) [hereinafter 2004 Social Security Report], available at http://www.ssa.gov/OACT/TR/TR04/tr04.pdf.
26 See id.
27 Id. at 16. The Board of Trustees estimates future costs and benefits under three sets of assumptions: a low-cost alternative, an intermediate alternative, and a high-cost alternative. Id. at 6. The figures in the text are taken from the intermediate alternative.
28 See id. at 8.
29 Id.
30 2004 Social Security Report, supra note 25, at 16.
31 Id.
32 Id.
33 Id.
34 Id.
35 2004 Social Security Report, supra note 25, at 17.
36 These ages were prescribed by amendments made in 1983. Social Security Amendments of 1983, Pub. L. No. 98-21, �� 201(a), 216(l), 97 Stat. 65, 107–08 (codified as amended at 42 U.S.C. � 416(l) (2000)).
37 The average life expectancy in the United States in 1940 was 62.9 years; by 2001, it had increased to 77.2 years. Elizabeth Arias et al., Nat’l Ctr. for Health Statistics, U.S. Dep’t of Health & Human Servs., Deaths: Final Data for 2001, 52 Nat’l Vital Stat. Rep., Sept. 18, 2003, at 27 tbl.8, available at http://www.cdc.gov/nchs/data/nvsr/nvsr52/nvsr52_03.pdf.
38 The ceiling was eliminated for Medicare taxes in 1994. I.R.C. � 3121(a)(1), amended by Pub. L. No. 103-66, � 13207(a)(1), 107 Stat. 312, 467–68 (1993). The contribution base was increased above the Social Security tax wage base to $125,000 for 1991, $130,000 for 1992, and $135,000 for 1993. I.R.C. � 3121(x), repealed by Pub. L. No. 103-66, � 13207(a)(2), 107 Stat. 312, 468 (1993).
39 See Shaviro, supra note 1, at 1293, 1299–03.
40 I.R.C. �� 3101(b)(6), 3111(b)(6) (2000).
41 Bds. of Trs., Fed. Hosp. Ins. & Fed. Supplementary Med. Ins. Trust Funds, 2004 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds 2 (2004) [hereinafter 2004 Medicare Report], available at http://www.cms.hhs.gov/publications/trusteesreport/
2004/tr.pdf.
42 Id. For 2003, HI taxes were 98% of HI expenditures, but this percentage is expected to decline to 81% of costs in 2019 and 26% in 2078. Id.
43 Id. at 12–13.
44 See id. at 21 (“Consideration of . . . reforms should occur in the relatively near future. The sooner the solutions are enacted, the more flexible and gradual they can be.”).
45 Id. at 1.
46 For 2003, 38.5 million people were enrolled in Supplemental Medical Insurance (“SMI”), and SMI revenues included premiums of $27.4 billion and general revenues of $86.4. 2004 Medicare Report, supra note 41, at 3 tbl.I.C1. There is an SMI trust fund consisting of any excess of general revenue appropriations and premium payments over expenditures. Id. at 1. The balance in this trust fund was $34.3 billion at the end of 2002 and $24 billion at the end of 2003. Id. at 3.
47 Id. at 2. The introduction of Part D “will add substantially to the overall cost of Medicare . . . and increase the proportion of such costs that are financed from general revenues.” Id. at 20.
48 Id. at 2. Table II.A2 of 2004 report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds provides more complete data. See id. at 26 tbl.II.A2.
49 See id. at 1.
50 Id.