Necessary Roughness

Forbes reports that the House of Representatives passed the Alternative Minimum Tax relief bill that came out of the Senate. President Bush will sign it.

“This is not the version of the AMT relief bill that the “new direction” Congress wanted to pass,” said House Speaker Nancy Pelosi, D-Calif.

The Democrats are upset because the bill violates their “pay-as-you-go” rules, but this didn’t need to happen.

There are two ways to balance a budget after a revenue cut. You could try to raise revenues elsewhere, as the Democrats tried. You could also cut spending. Oops, forgot whom we are talking about here.

The Dems are also likely wrong about the AMT fix being a revenue cut, in the long term. Every time we have cut tax rates, the increase in economic activity pays for the tax cut. We are still on the wrong side of the Laffer curve.