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Wonkbook: Has the GOP really taken taxes off the table?

at 07:23 AM ET, 03/23/2011


(Alex Brandon - AP)
Not to steal Bill Maher’s schtick, but new rule: if you’re not willing to consider tax increases, you’re not serious about deficits. Full stop. Just as rigid pacifists aren’t credible on national defense and dogmatic Christian Scientists are rarely consulted on health-care policy, a politician who has made an ideological vow to refuse to even consider tax increases is not interested in reducing deficits -- and that’s true no matter how often they say the word “deficits.” So if Grover Norquist has really gotten ironclad assurances from both Speaker John Boehner and Senate Minority Leader Mitch McConnell that they will not permit tax increases as part of a deficit deal, then the only sensible conclusion is that Boehner and McConnell are not interested in deficits.

One politician making it a priority, however, is Sen. Tom Coburn. The play that Coburn and the other “Gang of Six” members want to run is to shut down loopholes in the tax code and reform expenditures such that the code is flatter and broader and raises more money. Norquist (and his organization, Americans for Tax Reform, or ATR) considers that a tax increase, and he’s technically correct -- it will mean more taxes get paid. But Coburn’s office is undeterred. “Dr. Coburn has been arguing for many years, in word and deed, that the problem is overspending, not under-taxation,” John Hart, Coburn’s communications director, told the Hill. “That said, he strongly disagrees with ATR’s belief that every distortion and corporate welfare subsidy in the tax code, such as that for ethanol, is a ‘tax cut’ that needs to be preserved. Trusting Washington to pick winners and losers in the tax code should be anathema to conservatives. ATR’s odd definition of tax purity is an argument for tax deferment, tax complexity, more spending and unsustainable borrowing.”

It’s worth noting how far the goalposts have moved on this issue: rather than courage on the conservative side denoting a willingness to straightforwardly raise taxes to reduce deficits, it’s now a willingness to argue that closing tax loopholes, reforming expenditures and ending some tax breaks should not be defined as raising taxes -- even if doing so means more revenues. This may end up being a distinction without much difference: Given that the tax code includes more than $1 trillion in these breaks and expenditures annually, it’s entirely possible that we could find serious money there and never need to raise taxes in the traditional manner. But that’d mean taking on popular policies like the mortgage-interest deduction and the deduction for employer-provided health-care insurance. Raising taxes in the traditional manner might actually prove easier. And if that’s the case -- if it’s a straightforward tax increase or no balanced budget -- will the self-styled deficit hawks in the Republican Party step up and do what we all know needs to be done?

Top Stories

Happy birthday, health-care reform! The Kaiser Family Foundation got you a cool flowchart.

Turmoil in Libya and elsewhere in the Mideast is putting pressure on oil prices, reports Ben White: “Fears persist that Libyan leader Muammar Qadhafi could set fire to his country’s oil fields, which had been pumping about 1.6 million barrels a day before the country’s unrest turned into civil war, drawing U.S. and allied intervention. And it’s not just Libya that’s stirring concern. Unrest has been growing in Yemen and other countries throughout the oil-producing region. The biggest threat might be that turmoil will erupt in Saudi Arabia, a major U.S. oil supplier that pumps about 9 million barrels a day. A big drop in production there would certainly send U.S. gasoline prices, already nearing $4 a gallon in most places, skyrocketing.”

The Japan earthquake is leading to shortages of imported goods in the US, reports Peter Whoriskey: “The earthquake in Japan continues to threaten the U.S. autos and electronics industries with potential shortages, as plant shutdowns have limited production of silicon wafers for computer chips, led to supply problems that triggered temporary layoffs at two General Motors plants, and helped boost the price of the popular Toyota Prius. With clogged roads, a nuclear accident and rolling blackouts retarding Japan’s recovery, Honda and Toyota extended their post-quake plant shutdowns until at least next week...In many cases, manufacturers said that though they currently have enough Japanese-produced supplies, uncertainty over when production will restart there has clouded business prospects.”

GOP leaders have pledged to oppose a debt deal including tax hikes, reports Alexander Bolton: “Republican leaders in the Senate and House will not agree to tax increases in the guise of reform measures, according to a prominent conservative advocate for lower taxes. Conservatives have grown increasingly worried that Republicans in Congress may accept a tax hike as part of a broader deal to reduce discretionary and entitlement spending. But Senate Republican Leader Mitch McConnell (R-Ky.) and House Speaker John Boehner (R-Ohio) have pledged to Americans for Tax Reform (ATR) president Grover Norquist they will not support any deficit reduction package that increases taxes. This promise will make it considerably tougher to get Democrats to agree to a broad deficit reduction package.”

Anti-tax activists are dooming both a debt deal and tax reform, writes Bruce Bartlett: http://bit.ly/i11nqL

Obama is ramping up his usage of veto threats, reports Cristina Marcos: “President Obama this year has threatened to veto nearly as many bills as he did in 2009 and 2010 combined. Obama has issued six veto threats in 2011, four of them this month. Working with a Democratic House and Senate over the last couple of years, Obama issued eight during the entire 111th Congress. With Republicans now controlling the House, Obama’s veto threats have picked up considerably. All of the bills Obama has targeted this year have come from the lower chamber. He has threatened to veto a measure that would repeal his healthcare reform law and an appropriations bill calling for $61 billion in spending cuts. Since March 8, the president has also threatened four GOP housing bills with vetoes.”

Springfield Shopper interlude: The 55 best newspaper headlines from The Simpsons .

Got tips, additions, or comments? E-mail me.

Still to come: The Federal Reserve is rich, rich I tell you; banks have joined with teacher’s unions are making unlikely allies on debit care fee rules; Life in Africa is getting better even if parts of Africa aren’t getting richer; health-care reform supporters are amping up their defense of the bill; the White House is proposing cutting funding for programs that could help us predict major earthquakes; Obama reiterated his support for immigration reform in El Salvador; public opinion on nuclear energy breaks down on party lines; and an LCD Soundsystem cover.

Economy

The Federal Reserve is making some serious money, reports Luca di Leo: “The Federal Reserve‘s net income surged 53% to $81.74 billion last year from 2009 mainly due to higher earnings from securities the central bank bought to counter the financial crisis, according to final audited results released Tuesday. Almost all of that income — $79.27 billion — will be sent back to the U.S. Treasury. The record transfer marks a 68% increase from the $47.43 billion the Fed sent back to Treasury in 2009. The figures were slightly higher than preliminary results published in January.”

The House Appropriations Committee has changed radically in focus, reports Carl Hulse: “Representative Harold Rogers toiled on the House Appropriations Committee for 28 years, using the plum assignment to ship tens of millions of federal dollars back home for projects in his rural Kentucky district. This year Mr. Rogers, a Republican, achieved his dream of becoming chairman of the panel...But spending is now a dirty word among Republicans, and the Appropriations Committee ground zero, in the view of conservatives, for fiscal excess. As a result, the job Mr. Rogers won when his party took control of the House this year has suddenly morphed from dispensing largess to choking it off. ‘I ran to be head chef, but I wound up taking charge of the latrines,’ said Mr. Rogers.”

We’ve got to admit things are getting better, they’re getting better all the time, writes David Leonhardt: ”Over the last 30 years, infant mortality has fallen sharply, and life expectancy has jumped to 58 years. Most Liberians today can read. More than 80 percent of girls attend school. Politically, the country is much freer than it was in 1980, the year of a deadly coup. Economically, however, Liberia has been the world’s single worst performer over the last 30 years...everyone seems to agree that Africa is a story of failure. But is it? In a new book called ‘Getting Better,’ Charles Kenny — a British development economist based in Washington — argues that the answer is absolutely not. Life in much of Africa and in most of the impoverished world has improved at an unprecedented clip in recent decades, even if economic growth hasn’t.

The National Education Association backs the banks in their fight against debit fee regulations, report Victoria McGrane and Robin Sidel: “No effort to roll back last year’s Dodd-Frank financial-overhaul law has progressed further than the banking industry’s campaign to delay new fee limits on debit-card transactions...The latest organization to join the coalition of opponents to the rule is the National Education Association, which said Monday that the rule should be studied further because, though well-intentioned, it could raise the cost of banking services...Those concerns follow similar entreaties from the National Association for the Advancement of Colored People and the U.S. Hispanic Chamber of Commerce, which urged further study of the rule to ensure it doesn’t hurt poor and minority consumers by making banking services unaffordable.”

Matt Yglesias comments: “Several bloggers who I normally agree with but who had strong favorable views about the Durbin Amendment that contrasted with mine—Kevin Drum and Mike Konczal in particular—are also people who’ve really taken the lead in making the case that labor unions are a crucial ‘countervailing force’ to advancing middle class economic interests. So I wonder if any of them are inclined to rethink their views of the swipe issue in light of this.

The administration’s budget would put program spending lower than the CBO’s baseline: http://bit.ly/hNWnv0

The White House’s proposed cuts could prevent us from foreseeing a Japan-style earthquake, writes Mark Simons: “Under the White House’s proposed budget for fiscal year 2012, the U.S. Geological Service would experience a 9% cut in its earthquake programs budget... Another crucial federal agency is this regard is NASA. Its orbiting satellites can monitor movement of the Earth’s surface with exquisite fidelity. Properly equipped, they could identify elastic strain in tectonic plates... In fact, the National Research Council has said that a U.S. radar mission, the DESDynI radar satellite, should be a top priority for NASA...In the White House’s 2012 budget proposal, all funding for the DESDynI radar satellite mission was cancelled for the foreseeable future.”

Liberals should support Social Security reform, writes Robert Pozen: “Under the current schedule, because the growth in the initial level of benefits is linked to wages rather than inflation, the purchasing power of Social Security benefits is slated to rise by almost 50 percent over the next 50 years...Congress could therefore gradually slow the growth of Social Security benefits for middle and high earners while still allowing these benefits to rise in terms of absolute dollars and purchasing power. Lower-wage earners would receive everything they are now promised. These benefits reforms, if applied gradually only to workers 59 and younger, would reduce by roughly two-thirds the $4.8 trillion long-term deficit of Social Security. And, as liberals ought to like, these reforms would make the program more progressive.”

Cover song interlude: Baths plays “All My Friends” by LCD Soundsystem.

Health Care

The administration and allies are stepping up their PR campaign for health reform on its birthday, report Amy Goldstein and N.C. Aizenman: “This week, a loose federation of left-leaning groups is convening nearly 200 gatherings to peddle the virtues of health-care reform. A women’s speak-out in Philadelphia. A small-business round-table discussion in Albuquerque. A fish fry for seniors in Columbia, S.C. From the Obama administration alone, 42 officials are fanning out to events in 22 states. The choreography coast to coast is a birthday party, of sorts, to mark the year that has elapsed since President Obama signed into law the broadest changes to the nation’s health-care system in nearly half a century. But the commemoration is as much a strategy for image-shaping as a reflection of the new reality on the ground.”

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Jon Cohn assesses the state of the health-care reform debate at year one: “Are there better alternatives? Of course. But the loudest critics of the law, from the right, don’t have them. For all of their screaming, they have yet to put forward a credible plan that can do as much, let alone more, for less money. Their plans, stripped of misleading rhetoric, generally involve covering far fewer people, dramatically reducing the coverage that people have, or some combination of the two. Their dispute is not with the means Democrats have used to make health care affordable to all. It’s with the goal itself. No, the way to improve the law is to build upon it--to bolster the insurance coverage, reach those Americans the law as written will not reach, and to strengthen the experiments in cost control that work.”

I consider it pretty clear that Ryan-Rivlin shares a basic structure with the Affordable Care Act: “right now, what we know is that Ryan-Rivlin appears to work like the Affordable Care Act. Alice Rivlin believes that. The Tax Policy Center believes that. Tyler Cowen believes that. And they believe that because, given what we’ve seen of the proposal, it’s true. Ryan has had plenty of opportunity to explain in detail why it’s not true, but as of yet, he has not done so. He’s a busy guy, so perhaps he simply hasn’t found the time. It is possible that there is some major policy difference that’s not detailed in the legislation but that is in Ryan’s head. If that’s the case, however, he appears not to have mentioned it to Rivlin. I’d find that surprising, if true.”

Austin Frakt says that, if anything, the exchanges in the Affordable Care Act offer more incentive for cost control than those in Ryan-Rivlin: ”In the exchanges, subsidies will be tied to plans’ market prices. Subsidy levels in an exchange will be based on the premium of the second cheapest ‘silver’ plan. That’s, essentially, competitive bidding. Plans will compete within an exchange, trying to outbid each other to attract enrollees. Subsidies will be tied to those bids, as just explained, and, crucially, to one of the lowest bids...Now, consider the Ryan-Rivlin plan. As I’ve written before, vouchers in that plan would not be tied to the market. They would not be set by a competitive process. According to my conversation with Rep. Ryan’s staff, they would be controlled by the Secretary of HHS. Translation: it’s an administrative pricing approach.”

Glenn Kessler fact-checks the claim that the waivers the administration is handing out are showing favoritism to unions: http://wapo.st/e91pR1

Domestic Policy

Obama touched on immigration during a visit to El Salvador, reports Jackie Calmes: “President Obama ended his three-nation Latin American tour on Tuesday with a visit to El Salvador, a source of one of the largest immigrant groups in the United States, and agreed with its president that ‘the best strategy’ for curbing illegal immigration was to create economic growth in the region. Mr. Obama, in a private meeting and a subsequent news conference with El Salvador’s president, Mauricio Funes, said he remained committed to seeking a comprehensive overhaul of immigration law that both enhances American border security and provides a path to citizenship for illegal immigrants who have lived for years in the United States and have jobs and families.”

Impending cuts are spurring public employees to retire early: http://on.wsj.com/hTxWWt

The Supreme Court has sided against corporations in two recent cases, reports Robert Barnes: “The Supreme Court ruled unanimously Tuesday that a group of stockholders may proceed with its lawsuit against the makers of the nasal-spray cold remedy Zicam, saying the manufacturer should have disclosed that some who used the product lost their sense of smell...In a second decision Tuesday in which the court ruled against business interests, justices said that an oral complaint against an employer was enough to protect a worker against retaliatory action, such as firing...The Fair Labor Standards Act of 1938 prohibits retaliation against a worker who has ‘filed a complaint’ against an employer. The question was whether the complaint must be written. Justice Stephen Breyer, writing for five other members of the court, said it did not.”

The White House has unveiled its plan to increase college graduation rates: http://wapo.st/dWNUE9

Supercut interlude: Movie titles said by characters in those movies.

Energy

Public opinion on nuclear energy breaks down on party lines, reports Jennifer Epstein: “As nuclear plants in Japan continue to leak radiation in the aftermath of a string of natural disasters, Americans are voicing stronger opposition to the construction of new plants than they did a year ago, though a majority still support the use of nuclear power to produce electricity. In a CNN/Opinion Research Corporation poll released Tuesday, 53 percent of Americans said they oppose the construction of new plants, up from 47 percent in a CNN poll conducted in March 2010. Forty-six percent said they support the construction of new plants, down from 50 percent in last year’s poll. Support for building more nuclear plants breaks down along party lines, with 34 percent of Democrats and 57 percent of Republicans in favor of new plants. Independents are divided 50-50 on building new plants.”

The administration is set to issue more offshore drilling permits: http://on.wsj.com/gADrrC

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.

 
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