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Tax VOX

Any place for budget caps?

Budget caps are supposed to be a last resort, but they actually allow lawmakers to mindlessly slash spending and raise taxes across the board

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Obama, Senate Democratic Leader Harry Reid, and Senate Finance Committee Chairman Max Baucus have another idea: They’d put a cap on the deficit, not just on spending. In their design, if the deficit ceiling is breached, Congress would automatically slash spending and raise taxes. In theory, at least, this makes more sense since it recognizes that budget cutting needs to include both revenues and spending.

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Yet, the Obama version (he calls it a “debt failsafe trigger”) has its own flaws. While Corker-McCaskill would exempt revenues, Obama would protect Medicare, Social Security, and most low-income benefit programs from automatic cuts if the deficit exceeds agree-upon limits. He’d put most of the burden on military spending and taxes, which is just as foolish as protecting tax subsidies.

There are plenty of other variations on the theme—some better than these two, some worse. The Concord Coalition has a nice summary here. The Bipartisan Fiscal Commission proposed its version last year, so did the chairs of Obama’s fiscal panel. The budget resolution passed by the House last month included one too.

The game here is pretty obvious. Both political parties are using the debate over caps as yet another proxy for a fundamental philosophical disagreement: Is the current fiscal challenge an excessive deficit or a bloated government? I’d just as soon Congress use its energies to actually cut spending and raise taxes rather than waste time arguing over a budget process it is likely to ignore anyway.

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