House passes measure to extend low tax rates

The measure goes on to the Senate, where it's expected to be passed today.
KNIGHT RIDDER NEWSPAPERS
WASHINGTON -- By week's end, Republicans in Congress will send President Bush a $69 billion package to extend low tax rates for investors and temporarily spare millions of middle-class Americans from a creeping "alternative minimum" tax.
The package, along with a pending budget plan, would worsen an already grim long-term financial outlook for the federal government.
The Bush administration says the tax cuts will spur economic growth, which will yield more tax revenues. Critics say investors and the economy don't need the tax-reduction package and that it gives the vast majority of its benefits to the wealthy, relies on deceptive gimmicks to mask its true costs and will reduce revenues precisely when federal commitments for Social Security and Medicare benefits are set to explode.
Federal debt limit
Meanwhile, Congress is preparing to raise the federal debt limit for the fifth time in four years and the second time this spring, this time to nearly $10 trillion. That's almost double the $5.7 trillion gross federal debt of fiscal 2001, when President Bush took office. Many economists fear a debt crisis lies ahead that could menace the U.S. economy.
"We've got to make some very hard choices in the not-too-distant future. I don't think they'll be made by President Bush but they will have to be made by whoever is going to be the next president," said Mark Zandi, chief economist for Moody's Economy.Com, a consultancy.
"If you do the math, under any kind of reasonable economic assumptions, the budget deficit will be 10 percent of gross domestic product 20 years from now. That's untenable. The economy will break before we get there," Zandi said.
The tax plan that Republican congressional leaders hammered out Tuesday night would reduce revenues to the Treasury by nearly $90 billion over five years but would add $21 billion in tax increases, for a net loss of $69 billion.