Zen deficit reduction?
The American public may have just convinced Congress to do a better job in negotiating deficit reduction the next time around
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It turns out that our still-dysfunctional political process did something pretty good in coming to the debt limit deal (besides avoiding default, I mean). They opened up a lot of space to increase tax policy’s role in the second phase. There is a lot of wiggle room for revenues between the current-law baseline and the policy-extended baseline.Skip to next paragraph
'EconomistMom' (Diane Lim Rogers) is Chief Economist of the Concord Coalition, a non-partisan, non-profit organization which advocates for fiscal responsibility, and the mom of four (amazing) kids to whom she dedicates her work. She’s been blogging since Mother’s Day 2008.
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I then call for a commitment to stick to strict pay-as-you-go rules on the extension of any expiring tax cuts (especially the then-Bush-now-Obama ones), and specific recommendations for reductions in tax expenditures–i.e., revenue increases gained by broadening the income tax base from its current definition. Now, there are a lot of technicalities to work out between now and November in terms of how a paygo commitment on the Bush tax cuts could be scored, but no matter what the official baseline, base-broadening tax reform would always “count” as deficit reduction relative to current law (and not just current policy). And under the baseline that really matters in all this, the “baseline of public expectations,” letting the Bush tax cuts expire, or paying for any extension of any part of them, would also surely “count” as deficit reduction.
So I am very hopeful that real progress will be made the next time around, especially with members having come out of their past awful behavior with some remorse and now facing some scolding and “therapy work” back home with their constituents. I conclude my Tax Notes column this way, still in yogic bliss (but really, not on any drugs!), about this potential “zen moment” for tax policy’s role in deficit reduction:
The members of Congress chosen for the special committee have reputations as moderates with experience in working toward bipartisan consensus on budget and financial issues. Public opinion no doubt had great influence over these picks, as recent polls indicate that Americans are quickly losing respect for politicians perceived as unduly catering to extremist views. That same public opinion is likely to keep pressure on the committee to follow through and come up with major policy solutions that can earn bipartisan support.
So don’t count tax policy out of the debt limit deal. It may turn out just fine. Let’s harness the power of positive thinking and seek a better path to deficit reduction. Promoting the possible in this fiscal policy present moment is far more likely to lead to success than continuing to dwell on past mistakes. I’m convinced that this is the secret to getting our fiscal house in order while best promoting a civilized society.
Yes, it’s corny and incredibly optimistic, but what’s the alternative, and where would that attitude get us?
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