Does the declining deficit mean Obama should embrace the GOP tax plan?


(Michael Reynolds/European Pressphoto Agency)

Democrats and liberal commentators are surprisingly positive on the new GOP tax reform proposal unveiled Wednesday by House Ways and Means Committee Chairman Dave Camp (R-Mich.). "It doesn’t use the pretense of reform to shift the tax burden off the rich, as Republican 'tax reform' plans usually do," writes Jonathan Chait. While he knocks it overall, Jared Bernstein argues the plan has "worthy aspirations" and "bravely throws some treasured loopholes" like Wall Street tax breaks. Harry Stein, associate director of fiscal policy at the Center for American Progress, tweets that the proposal has "great ideas" and at least in one way -- limiting housing-related tax breaks -- "is far better targeted than current law."

So why won't Democrats embrace it? Here's Patty Murray (D-Wash.), chairwoman of the Senate Budget Committee, yesterday: "House Republicans refuse to ask the wealthiest Americans and biggest corporations to contribute to reducing the deficit or investing in jobs and economic growth. ... I also am very concerned that this proposal would actually increase deficits beyond the ten-year budget window -- an outcome we simply cannot afford given our long-term fiscal challenges."

We're at that point in politics where both parties' justification for not taking action in the present is because it would do the same harm well in the future. Democrats don't want to support a tax reform that looks okay right now because it might widen deficits in the 2020s and beyond. Republicans, meanwhile, are out everyday blasting President Obama's reckless spending policies, not so much for driving deficits higher today (they've fallen sharply), but because Medicare and Social Security are imperiled 10 or 20 years from now.

The worries about the future are especially striking because Murray released a new analysis looking at the outcome of the past three years of budget wars. And she found that they've reduced borrowing over the next 10 years by $3.3 trillion. And that isn't terribly surprising: The Congressional Budget Office has already reported that the budget deficit has fallen to 3 percent of gross domestic product, from nearly 10 percent a year ago. Right now, the budget deficit is not a massively pressing concern.

One of the basic reasons government is so gridlocked is because principle often comes before what's pragmatic: Theoretical arguments about the future trump practical ones the about the present. To quote Larry Summers, inverting John Maynard Keynes, earlier this week: "If you die in the short-run, there is no long run." And the warnings about the budget's future would be much more impressive if you could have told me in the year 2000 we would have wars in Afghanistan and Iraq and a massive economic crisis in 2008, or you could have told me in 1990 that we were going to see a huge productivity boom that helped expand the economy and lead to budget surpluses by the end of the decade.

All of which raises the question: Should Obama take the fig leaf of a tax reform proposal offered by Camp -- regarded by all sides as reasonable, the most compromising proposal made by a Republican in some time -- and respond with a cool, if not warm, embrace? Should Obama say, "I can work with this," and then work with it -- suggest some modifications to ease Democratic concerns, find some money for domestic investments in jobs and infrastructure and research and development? Or should he blow it off?

The funny thing is the Camp tax reform proposal is a bit of mirror image to Obama's own budget proposals -- compromise offers that try to reach the other side halfway. The Camp proposal is very much in the Obama mold.

Ahead of the 2014 mid-terms, though, Obama and the Democrats are going to blow Camp's proposal off. And that probably makes the most sense politically. But practically speaking, Camp has offered a proposal Obama probably could work with. Who knows if it ultimately would work out? But one could make a good argument that, if the goal is an economic policy that grows the economy and boosts jobs here and now, he should try.

Zachary A. Goldfarb is a staff writer covering the White House, focusing on President Obama’s economic, financial and fiscal policy.
SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Comments
SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Show Comments

(Michael Reynolds/European Pressphoto Agency)

Democrats and liberal commentators are surprisingly positive on the new GOP tax reform proposal unveiled Wednesday by House Ways and Means Committee Chairman Dave Camp (R-Mich.). "It doesn’t use the pretense of reform to shift the tax burden off the rich, as Republican 'tax reform' plans usually do," writes Jonathan Chait. While he knocks it overall, Jared Bernstein argues the plan has "worthy aspirations" and "bravely throws some treasured loopholes" like Wall Street tax breaks. Harry Stein, associate director of fiscal policy at the Center for American Progress, tweets that the proposal has "great ideas" and at least in one way -- limiting housing-related tax breaks -- "is far better targeted than current law."

So why won't Democrats embrace it? Here's Patty Murray (D-Wash.), chairwoman of the Senate Budget Committee, yesterday: "House Republicans refuse to ask the wealthiest Americans and biggest corporations to contribute to reducing the deficit or investing in jobs and economic growth. ... I also am very concerned that this proposal would actually increase deficits beyond the ten-year budget window -- an outcome we simply cannot afford given our long-term fiscal challenges."

We're at that point in politics where both parties' justification for not taking action in the present is because it would do the same harm well in the future. Democrats don't want to support a tax reform that looks okay right now because it might widen deficits in the 2020s and beyond. Republicans, meanwhile, are out everyday blasting President Obama's reckless spending policies, not so much for driving deficits higher today (they've fallen sharply), but because Medicare and Social Security are imperiled 10 or 20 years from now.

The worries about the future are especially striking because Murray released a new analysis looking at the outcome of the past three years of budget wars. And she found that they've reduced borrowing over the next 10 years by $3.3 trillion. And that isn't terribly surprising: The Congressional Budget Office has already reported that the budget deficit has fallen to 3 percent of gross domestic product, from nearly 10 percent a year ago. Right now, the budget deficit is not a massively pressing concern.

One of the basic reasons government is so gridlocked is because principle often comes before what's pragmatic: Theoretical arguments about the future trump practical ones the about the present. To quote Larry Summers, inverting John Maynard Keynes, earlier this week: "If you die in the short-run, there is no long run." And the warnings about the budget's future would be much more impressive if you could have told me in the year 2000 we would have wars in Afghanistan and Iraq and a massive economic crisis in 2008, or you could have told me in 1990 that we were going to see a huge productivity boom that helped expand the economy and lead to budget surpluses by the end of the decade.

All of which raises the question: Should Obama take the fig leaf of a tax reform proposal offered by Camp -- regarded by all sides as reasonable, the most compromising proposal made by a Republican in some time -- and respond with a cool, if not warm, embrace? Should Obama say, "I can work with this," and then work with it -- suggest some modifications to ease Democratic concerns, find some money for domestic investments in jobs and infrastructure and research and development? Or should he blow it off?

The funny thing is the Camp tax reform proposal is a bit of mirror image to Obama's own budget proposals -- compromise offers that try to reach the other side halfway. The Camp proposal is very much in the Obama mold.

Ahead of the 2014 mid-terms, though, Obama and the Democrats are going to blow Camp's proposal off. And that probably makes the most sense politically. But practically speaking, Camp has offered a proposal Obama probably could work with. Who knows if it ultimately would work out? But one could make a good argument that, if the goal is an economic policy that grows the economy and boosts jobs here and now, he should try.

Zachary A. Goldfarb is a staff writer covering the White House, focusing on President Obama’s economic, financial and fiscal policy.
SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Comments
SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=2, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Show Comments
Next Story
Zachary A. Goldfarb | February 27