The peculiar case against the Buffett Rule
The White House and Senate Democrats are embarking on another big push to sell the Buffett Rule. The Joint Committee on Taxation says the proposal will bring in $47 billion over 10 years. Chuck Schumer, assuming the extension of the Bush tax cuts, says it will bring i8n $160 billion.
You can look at this one of two ways. The projected revenues from the Buffett Rule are a small fraction of the $4-5 trillion in deficit reduction most experts think we need over the next decade. It’s not much.
On the other hand, any deficit-reduction package is made up of lots and lots of smaller policies that contribute to the bottom-line figure. Remember when House Republicans voted to defund National Public Radio and the Corporation for Public Broadcasting? “We’ve got ourselves in a mess as a nation fiscally and that we’re going to have to make some tough decisions,” said Rep. Kevin Brady. That proposal packed about one-one hundredth the deficit reduction of the Buffett Rule.
The White House’s opponents, however, have largely attacked the Buffett Rule for being too small. The Washington Examiner’s David Freddoso tweets, “I’m sorry, but if the Buffett Rule is your solution to the deficit problem, you’re not even on the same continent as serious.” His colleague, Phil Klein, produced a chart comparing the Buffett Rule to “Obama’s deficits”: As you might expect, the Buffett Rule is considerably smaller. Tiny, even.
Somewhat oddly, this suggests many conservatives would be happier if Obama proposed more tax increases. But that’s not true, either. After all, he has proposed more tax increases.
The Obama administration has released a series of deficit-reduction proposals that cut or raise around $4 trillion over the next 10-12 years. Their 2013 budget, for instance, included $1.5 trillion in specific tax increases, and trillions more in spending cuts. The Buffett Rule is one particularly high-polling policy among many.
Meanwhile, it’s $47 billion more in loophole-closing than either Ryan or Romney have offered. Both of them have produced tax plans that would reduce revenues by trillions of dollars. Both of them have promised to offset some amount of their tax increases by ending deductions and closing loopholes. Neither of them has named even one deduction they would end. But absent those offsets, their tax plans, as Paul Krugman points out, increase the deficit by far more than Obama’s plan.
In other words, when you add up the policies the two parties actually have in their budgets, Obama’s proposals reduce the deficit by more than Ryan and Romney’s. And that’s because he’s specified a bunch of tax increases that, together, add up to substantial deficit reduction. The Buffett Rule is the best known of these ideas, but it’s not the only one.
On the Republican side, meanwhile, the crucial changes to the tax code have been left unnamed. Without them, the proposals lead to substantial deficit deterioration. Is that really on the same continent as serious?