What struck me about Rick Perry’s unveiling of his flat tax proposal is how little attention most of the coverage paid to the massive increase in the deficit it would cause – or the enormous cuts it would require. Perry tossed off a ceiling on federal spending of 18 percent of GDP but gave us absolutely no details. And no wonder. A ceiling set at that level would require enormous cuts in Medicare, Social Security and/or military spending.
The New York Times helpfully cited the admirable James Horney of the Center on Budget and Policy Priorities — in the 10th paragraph of its story. Horney noted that Perry’s proposal would require cutting at least one-third of the federal budget outside of social security. It would mean, Horney said, “a dismantling of federal programs” and “draconian cuts in every kind of spending.”
But Perry spoke to the Republican Party’s id, if you’ll excuse the Freudian reference. He showed Republicans really don’t care about the deficit. What matters above everything else is cutting taxes on the rich.
Oh, yes, Perry gets around the fact that flat taxes are regressive by letting people file as they wish, either under the flat tax or under the existing rules. But this just cuts revenues as people seek the approach that will save them the most money. Again: what about the deficit?
Yes, there are serious deficit hawks who talk about the red ink in season and out. My friend and Brookings Institution colleague Alice Rivlin is one of them, and though I sometimes disagree with her, she is admirably consistent. But the Washington conventional wisdom is absolutely useless. Deficits are now yesterday’s news. I don’t really mourn that too much because I believe job-creation should be the central issue. But the will-o’-the-wisp quality of the Washington conversation is underscored by the fact that when anyone proposed new and temporary spending to boost job growth a couple of months ago the avatars of the conventional wisdom kept asking, “But what about the decficit?” But when Perry proposes his big tax cuts, such questions are nowhere to be heard – except in the 10th paragraph of some news stories.
As for short-term politics, this is a good move by Perry. It shakes things up, and as the candidate falling in the polls, Perry needed to shake things up. It also puts Mitt Romney in a complicated position. If Romney wants to be responsible and rejects Perry’s plan, the Texas governor will accuse his foe of being a “liberal” because he won’t cut taxes enough. If Romney goes Perry’s way, well, it’s flip-flop time again. This is an interesting test of the skill of the Romney apparatus, which you have to say has been pretty skilled so far.
But on the merits, Perry’s idea is atrocious. Let’s see how hard he gets pressed on deficits over the coming days.