Here’s why the supercommittee is failing, in one sentence: Democrats wanted the rich to pay more in taxes towards deficit reduction, and Republicans wanted the rich to pay less in taxes towards deficit reduction.
Any news outlet that doesn’t convey this basic fact to readers and viewers with total clarity is obscuring, rather than illuminating, what actually happened here.
I agree with those who have argued that supercommittee failure doesn’t really matter all that much, and that the obsession with the deficit is itself misguided and makes solutions to the actual crisis at hand — unemployment — far less likely to happen.
But since the press is going to be obsessing over the supercommittee’s failure for days to come, and since we will be inundated with reams of bogus false equivalence reporting about it, it’s worth stating as clearly as possible what really transpired.
And so: Any news outlet that doesn’t leave readers and viewers with an absolutely clear sense that the primary sticking point was over whether the rich should see their contribution to deficit reduction increase or decrease is letting down its customers.
You can dig this basic conclusion out of multiple news reports, but you have to try very hard to do it. The problem is that readers and viewers emerging from the cloud of fingerpointing and confused reporting risk coming away with the impression that both sides made roughly equivalent concessions, but just couldn’t meet in the middle, when this isn’t what happened at all.
For instance, the New York Times’s epic account gives you the truth of what happened in paragraphs 25-28:
A potential breakthrough occurred in a meeting in the Capitol late on the night of Nov. 7, when Republicans, led by [Pat] Toomey, offered a $1.2 trillion package that included $300 billion of new tax revenue. It was the first time Republicans had shown themselves open to significant amounts of new taxes.
But as Democrats studied the proposal, they found much to criticize. The proposal would have permanently reduced tax rates for all taxpayers, and Democrats objected, in particular, to lowering the rates paid by the most affluent Americans.
This is when the patient seemed to take a turn for the worse.
In the eyes of Republicans, when Democrats rejected the Toomey plan, saying it would provide a windfall for millionaires and billionaires, little more could be accomplished.
And this is only half the story. The GOP plan offered by Toomey would have exchanged increased revenues through the closing of loopholes and deductions in exchange for tax reform that would have cut all tax rates, but would have locked down the tax rate for top earners at 28 percent. This is the “concession” the GOP offered.
But in truth, what the GOP proposal would have really meant is that that the wealthy would pay less in taxes towards deficit reduction than they would if we just did nothing, i.e., let the Bush tax cuts expire, as stipulated by current law. As the Center on Budget and Policy Priorities explained, this not only would have taken further tax increases on the wealthy completely off the table in future deficit reduction talks; the cutting of tax rates across the board would also have disproportionately benefitted the wealthy.
GOP aides themselves told the Times (see the bolded portion above) that when Dems said No to this, because it would reduce what millionaires and billionaires would pay towards deficit reduction, little more could be accomplished. So again: One side wanted the rich to pay less towards deficit reduction; the other wanted the rich to pay more towards it. This is the difference that doomed the agreement.
Also: As Steve Benen notes, GOP Senator Jon Kyl effectively admitted that the GOP offer of new revenues didn’t amount to any kind of real tax increase, even if he didn’t mean to.
Let’s allow that the GOP offer was a concession, in the sense that the original Republican position was that any and all revenues of any kind would be an automatic nonstarter. And let’s compare it with the concessions Democrats proposed to make. Both of the Dem offers were roughly split evenly between tax increases and spending cuts. In other words, both Dem offers involved both sides making concessions of roughly the same size.
This is the primary difference in a nutshell: The Dem offer involved both sides making roughly equivalent concessions; the GOP offer didn’t. The main GOP concession — the additional revenues — would have come in exchange for Dems giving ground on two major fronts: On cuts to entitlements, and on making the Bush tax cuts permanent.
Putting aside whether the supercommittee failure matters at all, it’s plainly true that one side was willing to concede far more than the other to make a deal possible. And anyone who pretends otherwise is just part of the problem.