We had our team of US writers take on the Select Committee on Deficit Reduction. They assess the divide between Democrats and Republicans, the causes for the Super Committee’s current impasse, and potential solutions to the problems that the committee faces.
Daniel Backman ’15 — Staff Writer
Deficit reduction proposals from both Democrats and Republicans have been disappointing, and predictably so. In terms of the ratio between spending cuts and revenue increases, Democrats came up with a plan farther to the right than either Bowles-Simpson or Gang of Six plans, both of which were bipartisan plans. The Democrats, in their attempts at compromise with Republicans, have again merely compromised their own beliefs to craft a proposal that Republicans will not go along with anyway. And lo and behold, Republicans summarily rejected the plan, claiming it was a “non-starter” for many reasons – not least of which being that all of the Republicans on the committee have signed Governor Norquist’s pledge for no new taxes. Their proposal relies heavily on spending cuts, with only minor revenue increases that skirt the edges of any real tax reform.
Indeed, the number one thing missing from both of these proposals is comprehensive tax reform. The Bowles-Simpson plan released in December 2010 outlined bold moves to broaden the tax base, eliminate many tax expenditures, and lower overall corporate and individual rates, all while increasing revenues by $785 billion by 2020. This is no small number in itself, and the benefits of tax reform go beyond just deficit reduction.
The current tax code is riddled with tax expenditures, exemptions, and loopholes, forcing individuals and companies to spend heavily just to file their taxes. With tax accountants and lawyers in abundance, some companies have found ways to evade taxes altogether. The example of GE, which pays no corporate taxes, is one of many. This has led to unevenness and uncertainty among individuals and businesses, and it reduces our competitiveness in the world market. One-shot solutions like the Republicans propose will do little to decrease this uncertainty and create a more clear tax code for Americans to follow. The Democrats’ plan, in its reliance on tax increases for the rich, will likely make America less competitive, not more. While broadening the tax base and eliminating many corporate and individual exemptions would increase the burden on the rich in a similar way as the tax rate increases Democrats propose, the elimination of administrative costs and uncertainty – and the overall decrease in statutory tax rates – provided by the Bowles-Simpson plan are far more favorable.
There has been some talk between Boehner and Obama, among others, about some of these tax reforms, but Republicans are limited if they insist on considering tax reform as “new taxes.” Economists across the political spectrum, from Larry Summers to Greg Mankiw to Jeff Miron, agree that broadening the tax base is a good idea – I asked them while conducting interviews for a forthcoming article about Obama’s jobs proposal. Republicans and Democrats must put pandering aside and get serious about real reform.
Humza Bokhari ’14 — Staff Writer
When the US spends so much money on everything and still doesn’t see results, the question should be: are we spending it right? Does government spend money as carefully as we would our own?
It doesn’t look like it. That being said, the super committee shouldn’t be hesitant to slash across the board, without worrying about the political implications for things like cuts in education and infrastructure. Don’t get me wrong – both are extraordinarily important. But when the country is spending so much on education and still doing worse than countries that spend much less, well, maybe we need to see where the money is going. Tighter budgets might equal more accountability.
It’s here where I’d call out the Democrats, because they keep appealing to people’s emotions when it comes to cuts. We need cuts, and a lot of them.
I’m not saying the Republicans are perfect either. Calling the rich “job creators” isn’t a good enough excuse to prevent increases in taxes. Revenue holes need to be filled in somehow. It makes more sense that American citizens fill them in than the Chinese, who have already been super nice to us.
So the super committee needs to be aware that cuts and tax hikes are necessary, without worrying about voter blocs. These are not politicians who should be concerned with 2012. (Which is why Patty Murray’s presence raises a giant red flag.) They’re supposed to be secret, bipartisan, and dedicated to doing something for America. Let’s hope they do.
Matt Shuham ’15 — Staff Writer
The one thing that the Super Committee has made painfully clear is how out of touch our Congress really is. Grover Norquist, K Street, and a handful of billionaire bank rollers now have as much power as the American public. Polls have shown again and again that Americans support tax increases to take care of budgetary problems. By the way, this sentiment is shared by Republicans, the rich, and the very rich.
So why isn’t Congress (specifically, GOP and Tea Party members) reacting to popular opinion? Many lawmakers realize that the people that donate to them and buy their political ads are part of the minority of Americans that see “tax” as a dirty word, except when Ronald Reagan does it. Most of the lawmakers that are refusing to mention tax cuts realize they can still get re-elected, even if they know they are being irresponsible. In 2012, when the economy is still recovering and income disparity is still at an all-time high, they will ask their constituencies for another chance, this time faulting the EPA, Wall Street regulation, and health care reform. They know that Americans supported all of those measures when they were introduced, but they also know that unless they tow the line of conservative interests, their campaign coffers will be empty the next time around.
Frank Mace ’14 — Staff Writer
To argue that the GOP and Tea Party members are failing to react to “popular opinion” by opposing tax increases is to forget that the 2010 midterms happened. Matt contends that those who see tax as a “dirty word” are “part of a minority of Americans,” yet in 2010 this minority showed up in enormous numbers and propelled the GOP to the largest midterm electoral gains since World War II. The poll that matters most is the election, and the historic victory for candidates opposed to tax increases is driving the conservative opposition to tax hikes in democratic fashion.
Daniel
That would assume that voting trends represent public opinion on any one issue. People vote for candidates based on a whole range of issues, and often based on non-policy criteria from charisma to experience to the proverbial “who I’d like to have a beer with.” Elections are reflections of political trends, which brings in all these unquantifiable criteria as well, not merely policy beliefs. Hence the point of this super committee, which is supposed to transcend politics and make the best policies. Deferring to the past election to make decisions would be wholly misguided.
James Alver ’15 — Staff Writer
If elections in favor of a particular party don’t indicate support of that party’s platform (The anti-tax Tea Party was a huge motivator last year, and the GOP candidates almost unanimously opposed tax increases), then what’s the point of democracy? Sure, we’d like our politicians to have entirely neutral, rational reasons for everything they do, but politics just doesn’t work that way; politicians are elected because they have a bias.
The looming failure of the SC to accomplish anything is due to the fact that, like it or not, everyone on the panel is a politician, and both sides were given equal representation on the committee. Party-line type voters tend to see compromise as “caving” on the issues, so congressmen running for re-election, especially in the increasingly common “safe” seats where the primary is the election, are more afraid of being attacked for wavering on their values than for being an obstructionist. The very nature of politics has made this result almost inevitable.
Daniel
Perhaps my point was a little idealistic. But my fear is that saying simplistic things like “Americans voted for the party of no new taxes” prevents compromise on nuances that should really appeal to both parties. I go back to my original point: tax reform that raises revenue yet lowers overall tax rates, including 12 percentage points in corporate taxes, should appeal to Republicans. But because the simplistic view exists that all revenue is the same, we get oversimplified, partisan non-solutions instead of real reform. Once we boil the complexity of elections down to three words, “no new taxes,” we’re undercutting our own ability to innovate and reform, the very things that made America number 1, and the lack of which holds us back.
James
I agree that there are a lot of ideas being floated that both parties should be in favor of, but refuse to agree to in order to politick. The political climate (brought on by voters and activists, not necessarily party platforms) that punishes compromise definitely needs to change, but the current crop of Congressman is a result of that climate. We should be disappointed, but not surprised in the least.
Paul Schied — US Online Editor
I also think, perhaps idealistically, that the cycle that James talks about can be broken by true courage and true leadership, instead of the pandering that we’ve seen.
And while I fully agree that the political climate is disconcerting, there are some glimmers of hope for a productive deal. Areas like farm subsidies should provide both sides with a chance to compromise, and I think that the larger disagreements over taxes are serious but not irreconcilable. The fact that 40 Republicans have urged the committee to consider revenue increases is telling. Republicans realize that they can’t continue to look like the stubborn ones, in part because 2012 is a presidential election, and independents will be coming to the polls.
A deal that includes broadening the tax base and reforming some entitlement programs could push Republicans to relent on closing tax loopholes and other revenue increasing measures. The Democrats are right to try to avoid showing up the Republicans so far. If they can work towards making a deal that doesn’t require the Republicans to completely abandon the tenets that were affirmed in the midterms, this committee might just pull it off after all.
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