Sen. Pat Toomey (R-Pa.) made an appearance at the Heritage Foundation. The bulk of his talk concerned the supercommittee. He recounted:
The House Republican budget gave us a way to go forward. We never expected that the Democrats would warmly embrace that. We weren’t shocked when they didn’t, but we were opened to any number of other ways to try to change the problem with the architecture of these big programs. Failing a change in the architecture, we suggested can we at least make some meaningful reforms in things like eligibility and means testing so that we could make meaningful curbs to the long-term growth trajectory of these programs? . . . The Democrats had a different idea. They wanted a $1 trillion tax increase. They wanted that at the beginning. They wanted that in the middle. They wanted that at the end. Sometimes a little more than $1 trillion. But the gist of it was a massive tax increase with no changes whatsoever to the fundamental design of the programs that are driving the problem.
He went on to describe the two sides’ bidding:
[The GOP members’ plan] had a tax component and a spending component. On the tax side the idea was how could we maximize economic growth? And since I believe very strongly that capital formation is one of the biggest drivers of economic growth, we said let’s make sure we preserve the things that allow for capital formation. So let’s insist as one of the features of this proposal that the capital gains, dividend rates, and estate tax rates that are currently in force become permanent. Secondly, let’s insist that we have a revenue neutral corporate tax reform that would lower the top rate to 25 percent, broaden the base on which taxes are applied, and develop a territorial system so that we could encourage, among other things, huge repatriation of hundreds of billions of dollars that are overseas.
He explained that Republicans offered up a full $500 billion in revenue, half of it coming “from relatively noncontroversial sources, things like user fees, asset sales, the feedback that comes from higher compliance with a simpler tax code, for instance.” The Republicans, according to Toomey, also “complemented that with a suggestion that we have $750 billion in spending reduction.” In sum, he recalled:
We offered to generate revenue as the Democrats insisted they wanted. We suggested that we do it through the very mechanism that every bipartisan group that has looked at this suggested, which is tax reform that broadens the base and lower the rates. . . . Nevertheless, the Democrats said no. They need $1 trillion tax increase, that’s what they were interested in. We weren’t interested in doing that kind of damage to our economy.
Toomey observed that the Democrats had little incentive to make a deal. He said there was more at work than merely the president’s desire to run against Congress.( “That is the fundamental message of his campaign, and if the select committee had come to a great bipartisan agreement that could pass both Houses and be signed into law, it would rather muddle the message that the president is trying to run on.”) He explained that two key factors impaired deal-making:
In addition, let’s face it, many of the Democrats have long hoped to dramatically cut the defense budget. Well, that’s exactly what happens in the sequestration. So there was certainly a segment of that caucus that finds the alternative to success perfectly acceptable. And finally, there is also, I think we have all seen, a mood in the country on the part of the far left, anyway, that productive people need to be punished with a big tax increase.
We’ve seen that in the aftermath of the supercommittee’s failure. Democrats don’t consider revenue-raising scenarios “valid” unless they’re rate increases on the “rich.” If you don’t overtly take a pound of flesh out of the wealthy (closing loopholes isn’t good enough), it’s a no-go.
And as for the defense cuts, from the supercommittee’s inception Democrats and the White House conceded that the trigger (the incentive to make a deal) for Republicans — not for the Democrats, mind you — was the prospect of draconian cuts in defense. Has there ever been a more candid admission that Democrats don’t believe in adequately funding national security?
Toomey remains optimistic that some sort of tax reform and/or entitlement reform is possible. I’m much less so. Maybe after the 2012 election, but not before.