“GOP Reversion To Form”: When Did “Tax Reform” Become A Tax Hike?
One of the issues baffling non-conservatives in assessing the latest stage of the fiscal conflict in Washington is that Republicans are treating Democratic demands for loophole-closing on the wealthy exactly like it’s a tax rate increase. That’s odd, since it’s Republicans who have continuously injected loophole-closing–or as they usually call it, “tax reform”–into the debate. For years they’ve discussed it as a possible way to finance a revenue-neutral tax rate cut. Paul Ryan made it (or at least a very vague version of it) central to the math and marketing of his various budget proposals. During most of the 2012 campaign, Mitt Romney touted “tax reform” in the more traditional way, as a magic asterisk that would both limit revenue losses from the tax rate cuts he was proposing, and would also (even less plausibly) prevent his overall plan from changing the distribution of the tax burden. After the election, “tax reform” became part of the package Republicans supported as a “fiscal cliff” measure to maintain all the Bush tax rate cuts.
But Republicans have always been reluctant to talk about tax reform if it’s used for any purpose other than reducing tax rates or avoiding higher tax rates, even though conservative economists tend to support loophole-closing as an efficiency measure worth taking in isolation from rate changes.
So once the battle over tax rates ended (temporarily) with the so-called “fiscal cliff” agreement, Republicans quickly declared not just tax rates but any additional revenues as off-limits in future agreements. So even though you’d think they’d be at least as open to a tax-reform-for-entitlement-reform deal as they were for a tax-rates-for-entitlement-reform deal last year, that has not been the case. It’s tax rates that continue to drive GOP tax policies, even in the absence of any real chance that they will soon be raised or lowered.
Here’s how Jonathan Chait explains what he calls this “reversion to form:”
The answer to this piece of the mystery is clear enough: Republicans in Congress never actually wanted to raise revenue by tax reform. The temporary support for tax reform was just a hand-wavy way of deflecting Obama’s popular campaign plan to expire the Bush tax cuts for the rich. Conservative economists in academia may care about the distinction between marginal tax rates and effective tax rates. But Republicans in Congress just want rich people to pay less, period. I can state this rule confidently because there is literally not a single example since 1990 of any meaningful bloc of Republicans defying it.
What has aided the easy reversion to form, with low taxes for the rich dominating all other considerations, is the pent-up rage and betrayal John Boehner has engendered among his most conservative members. Almost nothing Boehner has done since taking over as speaker has endeared him to his ultras. Every subsequent compromise creates more embitterment, and the last few moves have provoked simmering rage.
Conservatives had to swallow a tax hike, and then swallow an increase in the debt ceiling. Boehner has, incredibly, had to promise his members that he will not enter private negotiations with Obama.
The pressure for confrontation as a method has built up to the point where seemingly no deal Boehner could reach would leave him safe.
So Republicans aren’t open to the tax reforms they’ve supported in the past, or to entitlement reforms they’ve been demanding for years (though this particular issue is complicated by the fact that they only want “entitlement reforms” if they significantly reduce actual benefits; anything else can’t possibly be a “reform”). They have truly painted themselves into a corner this time, and that’s why we are going to have a sequester followed quite possibly by a government shutdown if Democrats resist making the domestic spending part of the sequester permanent.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal. February 26, 2013
“Republican Reformers”: Absolutist’s Advocating For No Tax Hikes Of Any Kind For The Rich
It’s been a good week for the intellectual cause of reforming the Republican Party. Ramesh Ponnuru has a sharp op-ed in the New York Times today arguing that Ronald Reagan’s economic program was well tailored to the conditions of 1980, but does not meet the needs of the present day. (Ponnuru could have noted that Reagan himself altered his own program in response to the massive structural deficits it created — the conservative liturgy defines the Reagan gospel as the pure 1981 version.) Bush administration veterans Michael Gerson and Peter Wehner have a longer piece in Commentary arguing along similar lines.
These are smart arguments and I devoutly hope for their success. Yet they contain the same flaws that seem to recur in all the efforts to reform the GOP from within: an unwillingness to identify or confront the forces within the party that prevent these reforms from succeeding.
Yesterday, for instance, Paul Ryan appeared on This Week to argue once again for why Republicans would not accept any new revenue as part of a deficit reduction plan:
But taking tax loophole, what we’ve always advocated is necessary for tax reform, means you’re going to close loopholes to fuel more spending not to reform the tax code. …
So if you take tax loopholes to fuel more spending, which is what they’re proposing, then you are preventing tax reform, which we think is necessary, to end crony capitalism and to grow the economy.
This is pure Republican orthodoxy. What’s remarkable about the ability of anti-tax zealots like Ryan to sustain their position is that it places them in direct opposition to conservative goals on both defense and spending. After all, Obama is offering to cut spending on retirement programs and to cancel out cuts to defense — two things large chunks of the GOP would like — in return for more revenue. He’s not even demanding higher rates. He’s merely asking to reduce tax deductions.
Ryan insists he won’t take the deal, because if he uses the revenue from reducing tax deductions to close the deficit, it won’t be available to reduce tax rates. Every other fiscal priority must give way for the overriding goal of reducing marginal tax rates.
But where are the Republicans speaking in opposition to Ryan and his allies? I haven’t seen a single one. Instead, they ignore the existing configurations altogether. Wehner had a blog post yesterday railing against “the refusal by Democrats to reform entitlement programs in general.” But Obama has been offering to reduce spending on Social Security and Medicare for two years now, in return for Republican agreement to spread the burden of the fiscal adjustment. They won’t take the deal.
Now, maybe Obama’s deal isn’t exactly what Ponnuru, Gerson, and Wehner would like. But if Republicans want to reform their party’s identity and make it into something other than absolutist advocacy of low taxes for the rich, they need to come up with some negotiating position on fiscal issues other than “no tax hikes for the rich of any kind no matter what we get in return.”
By: Jonathan Chait, New York Magazine, February 18, 2013
“Same Old Talking Points”: Republicans Are Committing Political Malpractice
Republican voters must be steaming mad.
But they don’t seem to show it despite the political malpractice of their party leaders over the last several years.
Republicans bet everything to defeat President Obama’s health care reform plan — without ever offering a real alternative or working with Democrats to find common ground. Then they doubled-down on hopes the Supreme Court would overturn the law. They doubled-down again believing that voters would deny President Obama re-election and they could repeal the law. They lost every time. Now, the country will live under a health care law — for probably a generation or more — that could have been based on many Republican ideas had they simply negotiated.
The GOP is doing the same thing with the budget sequester fast approaching on March 1. President Obama wants additional tax revenues by closing loopholes in the tax code as part of a plan to avoid the across-the-board spending cuts. He’s also promised significant cuts — including to both Social Security and Medicare — in return. But Republicans on Capitol Hill aren’t interested. They could likely win more spending cuts than they would have to concede in new tax revenues if they negotiated. Instead, they dig in.
The GOP’s stance is especially maddening since just two months ago they were willing to raise tax revenues by closing loopholes during the “fiscal cliff” debate. Now every Republican leader speaks from the same talking points saying additional tax revenues are “off the table.” As a result, the country will get fewer but more damaging spending cuts via the sequester.
Common sense would suggest Republican voters would rise up against their party leaders for failing so dismally to advance their party’s stated goals. Their silence is deafening.
By: Taegan Goddard, The Cloakroom with Taegan Goddard, The Week, February 19, 2013
“Willfull Ignorance”: Short-term Memory Loss Grips Republicans In Washington
ABC News’ George Stephanopoulos devoted a good chuck of “This Week” to discussed automatic sequestration cuts yesterday, and asked Rep. Tom Cole (R-Okla.) for his prediction. The Republican congressman said President Obama came up with the sequester — a claim that simply isn’t true — before saying his caucus is “prepared to negotiate on redistributing the cuts.”
It led to this exchange:
STEPHANOPOULOS: And you’re saying all cuts. Republicans are accepting absolutely no revenues?
COLE: No. Look, absolutely none. The president’s accepted no spending cuts back in the fiscal cliff deal 45 days ago, so you get all — no spending cuts back then. Then you’re going to get no revenue now.
Around the same time, Sen. John McCain (R-Ariz.), who appears to spend more time on Sunday shows than in the Senate, said he’s open to some revenues as a way to replace the sequester, but added, “[W]e have raised taxes. Why do we have to raise taxes again?”
Of course, by that logic, there’s no reason not to ask, “We have cut spending. Why do we have to cut spending again?”
It’s troubling that Republican policymakers have such short memories, and seem to have no idea what policies they voted for as recently as 2011. It’s one of the more breathtaking examples of willful ignorance in recent memory.
But if we assume that lawmakers like Cole and McCain are sincere, and they literally can’t remember the basics of recent budget policy, then it’s probably worthwhile to set the record straight.
In 2011, Democrats and Republicans agreed to between $1.2 trillion and $1.5 trillion in spending cuts, depending on how one tallies the numbers. The cuts included no new revenue.
In 2012, Democrats and Republicans agreed to a deal that raised revenue by about $650 billion. The new revenue included no new cuts.
In 2013, Republicans are saying they remember what happened in 2012, but the 2011 policy has been blocked from memory.
This is crazy. Folks like Cole and McCain keep saying the 2012 deal didn’t include spending cuts, so the sequester has to be 100% in the GOP’s favor now, without exception. Why? Because Republicans haven’t gotten spending cuts.
Except they already did get spending cuts. Indeed, the cuts from 2011 were twice as big as the revenue from 2012.
Even if the parties agreed to an entirely balanced agreement this month to replace the sequester — roughly $600 billion in revenue and $600 billion in cuts — Republicans would still be getting the much better end of the deal. The total for the entire package, negotiated in parts over the course of two years, would be over $4 trillion in debt reduction — with a cuts-to-revenue ration of about six to one.
For that matter, Obama isn’t calling for “tax increases”; he’s calling for new revenue through closed tax loopholes and ending certain tax deductions. As recently as last month, Republican leaders said such a policy doesn’t count as a “tax increase,” though it’s suddenly become outrageous now that the president agrees.
This really isn’t that complicated. Either Republicans have a child’s understanding of fiscal policy, the memory capacity of a goldfish, or they think Americans are fools. At this point, I’m no longer sure which, though I’m open to suggestion.
By: Steve Benen, The Maddow Blog, February 11, 2013
“Driving While Impaired”: After Falling In Sequester Ditch, GOPers Look For Way Out
Remember the Republicans’ debt-ceiling crisis in 2011? It was about a year and a half ago when GOP leaders handed President Obama a ransom note: accept more than $2 trillion in debt reduction or the economy gets it. The parties agreed to more than $1 trillion in cuts, but agreed they needed more time to work on a larger agreement.
So, they crafted a mechanism intended to force both sides to the negotiating table — a sword of Damocles hanging over Washington’s head that would be so severe, Democrats and Republicans would have a strong incentive to strike a deal to avoid the drastic consequences.
The mechanism was automatic sequestration cuts — or “the sequester” — valued at about $1.2 trillion, half of which would come from the Pentagon. (Democrats originally wanted automatic tax hikes to motivate the GOP, but Republicans refused — even hypothetical tax increases were deemed outrageous — and deep Defense cuts were used instead.)
These cuts kick in three weeks from today, and so far, the two sides aren’t close. Democrats want a balanced deal the GOP should find tolerable — spending cuts on one side of the ledger, revenue from closed tax loopholes on the other. Republicans, meanwhile, say they’re prepared to simply let the sequester happen, regardless of the consequences to the economy, the military, or the public.
At least, that’s what they say publicly. Behind the scenes, the GOP strategy is on shaky ground.
One thing is becoming clear: Republicans want to find a way to replace the cuts in the sequester, despite some loud rhetoric to the contrary.
Top House Republican aides privately concede that the politics of allowing the cuts to hit — layoffs, furloughs and a stalled economic recovery — are tough to stomach and they would prefer to make a deal, on their terms of course. […]
A top GOP leadership aide, speaking anonymously to divulge internal thinking, laid out 10 options that the House GOP leadership would be willing to accept, along with savings estimates developed by GOP policy aides, in order to avoid the sequester.
So, the good news is, Republicans are not actively seeking a course that would hurt the country on purpose. The bad news is, they’re still struggling with the whole “compromise” concept.
To date, with just 21 days to go, Republicans leaders have offered nothing — there is no sequester alternative on the table, and in this Congress, no bills to replace the sequester have even been written. There are reportedly 10 different scenarios Republican leaders would be willing to consider, but all 10 are made up entirely of deep spending cuts and would not include so much as a penny in additional revenue.
In other words, Republicans want to replace sequestration with a package that gives them 100% of what they want and 0% of what Democrats want.
This after a national campaign in which Democrats voiced support for a balanced approach, and the American electorate strongly agreed.
It’s nice, I suppose, that there are so many Republican-friendly options to choose from — the menu includes everything from raising the Medicare eligibility age to chained CPI, cutting federal pensions to cutting agricultural subsidies — but so long as GOP officials expect a 100%/0% deal, the likelihood of a breakthrough is remote.
That said, with three weeks to go, I expect some movement away from the intransigent status quo. Put aside the rhetoric and the posturing and we’re left with a picture in which Democrats and Republicans actually have the same goal: to get rid of the sequester. The GOP doesn’t want to admit it, but a bipartisan deal, featuring a combination of spending cuts and revenue from closed tax loopholes and unnecessary deductions could come together with relative ease.
What’s more, if the automatic sequestration cuts happen, and the economy tanks, Republicans probably realize this will be their fault and they’ll likely get the blame. It’s why Josh Green wrote late yesterday that a “Republican crackup over the sequester” almost seems inevitable.
As the process unfolds, I’d like to take a moment to throw in my own suggestion: get rid of the sequester. Don’t try to replace it, don’t struggle to find some satisfying ratio that pleases both sides, don’t delay it for a few months, just cancel it. The deficit is already shrinking, spending has already been cut, and if policymakers want to do even more to improve the nation’s long-term finances, they can work on a deal without some dangerous threat hanging over their heads.
Sequestration was a bad idea. There’s no reason both sides can’t agree to get rid of the darn thing and start fighting over something else.
By: Steve Benen, The Maddow Blog, February 7, 2013
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