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ThePlumLIneGS whorunsgov plumline
Posted at 04:13 PM ET, 11/15/2011

The supercommittee deadlock, made simple

I don’t think I’m breaking any new ground here. But I thought it might be valuable to try to sum up what’s causing the deadlock on the deficit supercommittee in the simplest terms possible, because people keep claiming that Republicans are willing to raise revenues without pointing out that they also want to cut tax rates on the wealthy.

So here goes: Democrats sincerely think the better policy outcome is for the wealthy to pay more in taxes towards deficit reduction. Republicans sincerely think the better policy outcome is for the wealthy to pay less in taxes towards deficit reduction. And that’s it. Sure, there’s a lot of procedural talk about doing this in a two step process and so forth. But this is the sticking point in a nutshell.

This isn’t meant to be glib. This is the essence of the policy disagreement — heck, let’s even call it a principled disagreement — that’s making a deal impossible. Republicans think government spending is the problem and that a judicious policy response to the deficit includes spending cuts that outweigh tax increases. And so the latest GOP plan would cut spending by $750 billion and raise around $500 billion in revenues. That last number has many reporters demanding that Dems explain why they won’t accept the GOP offer of new revenues. David Gregory did that over the weekend, and today on PBS, Judy Woodruff pressed Chris Van Hollen today along these lines:

it is reported the Republicans have moved off their anti-tax position enough to propose $300 billion in new taxes as part of a $500 billion package. Why isn’t that acceptable to the Democrats?

Right, but in exchange for Republicans moving off their “anti-tax position,” they are demanding that the Bush tax cuts be made permanent, which would cost $3.7 trillion over ten years and ... lower taxes on the rich. Republicans are looking for ways to sell conservatives on the idea of higher revenues, but they are doing so by arguing that it will mean lower taxes on top earners in the long run. A top Republican, Rep Bob Goodlatte, told ABC’s Top Line today that conservatives need to understand that this deal including revenue increases is a good one because it would freeze the Bush tax cuts in place — which, again, would lower taxes on the wealthy.

Dems, by contrast, don’t think government spending is the primary problem. That’s why they are proposing a $2.3 trillion deficit reduction plan that includes a one-to-one matchup of cuts to revenues, and doesn’t make new revenues more palatable by including tax cuts to the rich. Unlike Republicans, Dems think the wealthy should pay a greater share of deficit reduction. According to a Dem aide, they might even be willing to accept lower tax rates, if the closing of loopholes and doing away with deductions ensures that the wealthy end up paying more than they do now.

Got it? One side sincerely thinks the better policy outcome is that the rich pay less. The other side sincerely thinks the better policy outcome is that the rich pay more. Who says this process is complicated?

By  |  04:13 PM ET, 11/15/2011

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