Aug ‘12
23
WOULD ROMNEY’S TAX PLAN OR PAUL RYAN’S BUDGET PLAN CUT THE BUDGET DEFICIT?
We already know that Congressman Paul Ryan (R-WI) is the only Republican with a “plan.” See Ryan Lizza’s article in the New Yorker on 8-6-12 or David Wessel’s article in the Wall Street Journal on 8-16-12. It is a budget plan approved by Republicans in the House, meaning it achieves all its federal spending reductions from reducing what many Americans consider earned benefits. In addition, it greatly reduces federal financial support for state Medicaid efforts to reform health care for low and moderate income citizens and it raises no federal revenue from income tax reform to pay for increased defense and homeland security spending and serious changes in entitlement eligibility. So it gets no bipartisan support.
North Carolina businessman Erskine Bowles co-authored the now famous Bowles-Simpson bipartisan national fiscal commission. It recommended reducing the federal budget deficit by $4 trillion over 10 years with $3 trillion in entitlement savings and $1 trillion in tax expenditure savings (call them tax breaks, earmarks, loopholes, whatever). Ryan was on the commission but refused to join three Republican Senate members in endorsing its recommendations. In the Washington Post on 8-10-12, Bowles said Mitt Romney’s tax reform plan can’t cut the deficit. He also took note of the fact that tax “loopholes” reduced income tax revenue by $113 billion a year, which is more than the entire tax code raises in a year.
Noted economist Robert J. Samuelson is no Paul Krugman when it comes to fiscal issues. But in his Post 8-8-12 op ed, Samuelson declares Romney’s tax plan “makes no sense.” In an attempt at “fairness, efficiency and simplicity” it raises taxes on most Americans to provide tax breaks for high income earners. “The political damage from this lopsided plan transcends its details…the plan seems crafted mostly to satisfy Republican constituencies.” Steve Moore’s article in the Wall Street Journal on the 8-11-12 interview with House Ways and Means Chair Dave Camp (R-MI) reinforces Samuelson’s point.
The point made by both Samuelson and Camp is that President Ronald Reagan’s experience in 1985-86 tax reform provides a path to fairness, simplicity and bipartisanship. But only if it includes revenue increases, a point on which Camp is ambivalent because Republicans are adamant. The Reagan/Rostenkowski 1986 model works only if a president is willing to deal with the political realities that bringing the leaders of both parties on board is essential to getting off “tax the rich” schemes like Obama’s and going for Bowles-Simpson/Reagan-Rostenkowski tax expenditure reform.
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