CBO's Observations

The CBO reports:

Like all of CBO’s cost estimates, our estimate for this legislation shows the effects of the legislation relative to current law at the time we did the estimate. Relative to the laws in place at the end of 2012, we estimate that this legislation will reduce revenues and increase spending by a total of nearly $4.0 trillion over the 2013-2022 period. ...

From that perspective, why will the legislation increase deficits? 

Mostly because, under the laws previously in place, numerous tax provisions originally enacted in 2001, 2003, and 2009 would have expired. 

As a result, in 2013 personal income tax rates would have gone up for people at all income levels, the alternative minimum tax (AMT) would have applied to many more people, estate and gift taxes would have risen, and a number of other revenue-increasing changes in tax law would have taken effect. 

This legislation will prevent those changes in law from occurring or reduce their scope; hence, relative to what would have happened without the legislation, it embodies substantial tax cuts. 

The legislation also will boost deficits by increasing spending, mostly for refundable tax credits and unemployment compensation.

 We have argued this in previous analyses. The big issue is the expenditures and certain tax cuts. Unemployment and food stamps are a big driver and the becalmed labor force is a principal driver. Nothing seems to correct this.