With the government shutdown over, the serious political discussion moves to the budget talks, already in progress. But it’s already obvious the talks are likely to go nowhere, because Republicans won’t give any ground on new revenues. If these talks founder, it’ll probably mean more wrangling over temporary solutions and more crises.
So, with Republicans seemingly intransigent on new revenues, here’s my idea for a grand bargain: Replace the sequester, and boost spending levels, with a trade that exchanges tax cuts that Republicans want for a big fat infrastructure spending package. Or a smaller infrastructure package and immigration reform. Or, to reach for the stars, a carbon tax.
Robert Costa has an interview interview with Mitch McConnell, in which he describes his position on new tax revenues as follows:
“When the speaker has had conversations with the president over the last three years, they have always insisted on a $1 trillion tax increase — revenue scored by the Congressional Budget Office. That’s their demand for any major entitlement reform. But we don’t think we should have to pay a ransom to do what the country needs.”
Setting aside the ludicrousness of calling increased taxes a “ransom,” every single budget negotiation over the last three years has fallen apart over this point. Taxes have taken on almost totemic significance within the Republican party. They quite plainly will not agree to any rise in revenue (at least on the rich, which is what Democrats want), even if by making every millionaire pay an extra nickel they could somehow resurrect Ronald Reagan.
However, it might be possible to move past this point. The way to do it would be for Dems to ask for a different concession from Republicans, such as a huge boost in infrastructure spending to get the economy going again, and give them tax cuts in exchange for it.
Wouldn’t Republicans howl that this would increase the deficit? Maybe, but it’s also obvious that Republicans’ anti-deficit stance is 99 percent BS posturing. What’s more, the deficit really isn’t that big of a deal right now, as Ezra Klein says. In fact, the biggest problem with the deficit is it’s coming down too fast. All this austerity since 2011 has been a palpable drag on the economy, and if doubling the budget deficit would bring unemployment down a couple points, I’d make the trade in a heartbeat. What’s more, the US has a lot more fiscal running room than even three years ago — future budget projections have improved sharply, due to slowing health care cost growth.
Such an offer would throw the incoherence of the Republican budget position into sharp relief. Paul Ryan’s budget (like the Bowles-Simpson plan) ostensibly was motivated by near-panic over the size of the budget deficit, but its foundational principle was a huge package of tax cuts. I’d wager that if the offered tax cuts were big and juicy enough, Republicans would conveniently forget all about their balanced budget mania (just like they did in the Bush years) and might be ready for some good old logrolling.
This deal would be quite a long shot. But it’s got a better chance that anything that hinges on tax increases–and we don’t need tax-side austerity in this economy anyway. In fact, probably the biggest roadblock to such a deal would be President Obama, who seems to actually value his deficit reduction quite highly.
I earnestly urge him to consider otherwise. This would be a trade worth making.