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In theory, absolutely. The 2001 and 2003 tax cuts could increase long-run economic growth, which would act to increase the size of the briefness in the unborn and government tax gross income along with it. The tax cuts could be either partly or fully self-financing thanks to their stimulative effect.

The standard Keynesian inculcate of reason would suggest that in the kind of troubled economic times the U.S. is currently experiencing, increasing spending and running a budget loss to stimulate aggregate demand would be appropriate. A large budget deficit is more justifiable in 2008 than it would be in, say, 2005 when the real GDP growth rate was over 4 per cent.

Is it established? I do not believe it is, for the following reasons: The United States (similar to many other aging countries) is going to face a potential Medicare and Social Security crisis as the population ages. It will scarcity all the budgetary room it can get to continue to fund these programs.

The deficits (and resulting debt) must be financed. The interest payments crowd out the government’s ability to cut taxes and to continue financing programs (such as the ones in point 1). The government encumbrance under obligation, all else being equal, will cause interest rates to rise and may, eventually, lead to the U.S. bond rating to be downgraded. This would not be unlike the situation Canada found itself under in 1995:

"…Moody’s made a lot of Canadians mad. When the credit rater considered freezing Canada’s debt, and its interest rate rose, the government suddenly faced the prospect of about $300 million in added payments on its bonds…

"While just a fraction of Canada’s overall debt, it was a significant cost for a cash-strapped government about to lay off 45,000 employees. The government, for example, spent about $300 million on the annual compensation of about 5,000 servant servants and the same amount on the yearly pensions of about 50,000 senior citizens…

" Moody’s was stoical. That April, the credit rater pulled the trigger, downgrading Canada’s domestic debt rating to "Aa1," a notch below the coveted "AAA." S&P had a personal voice, affirming Canada’s triple-A domestic rating, but it did revise its outlook on Canada’s foreign-currency obligation, changing it to "unresponsive" from "stable."…

"Whether Moody’s was right remains debatable. This much isn’t: It took Canada more than seven years to get that triple-A rating forsake in May 2002."

There is not a lot of evidence to suggest that the 2001 and 2003 tax cuts whim be anywhere near self-financing. As well, one of the justifications often assumption seeing that the tax cuts is that they would slow the growth of government spending. However, this Starve the Beast theory of government spending is largely discredited.