GOP quandary: Is a vote to eliminate tax breaks actually a tax hike?
One of the few potential points of bipartisan compromise in the budget stalemate is reining in tax breaks. A Senate vote Tuesday could reveal whether GOP senators are on board.
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But it will be very hard to fix America's long-term fiscal imbalances without a bipartisan deal. Democrats are wary of signing off on any plan to close the whole budget gap through spending cuts, as many Republicans would like to do.Skip to next paragraph
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If Republicans move toward the Coburn view and away from Norquist, it could help create conditions for a possible compromise, along the lines of a package proposed by President Obama's bipartisan fiscal commission last year.
That commission called for stabilizing the nation's debt over the next decade, with roughly $4 trillion worth of reductions in projected deficits. The plan included roughly $1 dollar in new tax revenue for every $2 in spending cuts.
Public opinion polls show a public that is not enamored of the budget policies of either party. American voters are willing to see some of both spending cuts and tax hikes as part of an effort to put the nation on sound footing for the future, a number of polls have found, including one new one by the Pew Research Center.
While the two parties have different opinions on economic policy and the size of government, leaders in both parties agree on the to cut spending. They also agree in general on the need to streamline the tax code.
That points to the elimination of tax breaks as a potential bipartisan solution.
"It seems like both sides want to do that," says Diane Lim Rogers, chief economist at the Concord Coalition, a group that supports controlling the national debt. "The big difference is the Republicans are stuck with this no new taxes pledge, the Grover Norquist pledge."
Such choices aren't easy for either side to make. But the alternative may be protracted gridlock – and the risk that the rising public debt sparks a crisis of confidence among investors.
In the recent Pew poll, roughly three-quarters of Americans say the budget deficit is a major problem that the country must address now. In addition to cutting spending, a sizable majority say they would support reducing the deficit by raising taxes on high-income Americans and eliminating tax breaks for large corporations.