Note: Paper has been updated from original posting to account for new estimate of previously enacted savings.

Update (12/12/12): Figure 1 has been corrected from an earlier version that was based on estimates that "stacked" the provision to tax dividends as ordinary income before the provision to increase rates, therefore counting the interaction within the rate changes. This correction does not affect the overall savings, and actual savings from allowing only some of the upper-income tax cuts to expire may differ from the sum in the figures above due to various interactions.

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Updated 7/16/2012: At the end of 2012 and the beginning of 2013, several policies are set to take effect that would reduce deficits and debt, but in untargeted and abrupt ways. At the same time, lawmakers much not extend these policies without offsets. A smart and gradual debt reduction plan can be the solution.