“None of the ‘critics’ are showing that what we did was wrong or invalid,” Gale said in an e-mail. “Instead, they are showing ways of getting out of the five-way Gordian knot, and all of those ways involve violating one or more of the five items that led to the knot in the first place.” Taxing interest on state and local bonds or on the value in life insurance policies, for example, would violate Romney’s preference for preserving low taxes on savings and investment.
“So we are saying, ‘It is impossible to do these five things without raising taxes on households with income below $200,000.’ And they are saying, basically, ‘It is possible to do up to four of the things without raising taxes on households with less than $200,000,’” Gale said. “Everyone — including us — agrees that if you give up on some of the goals, give up on some of the proposed tax cuts, or [protect] a [less affluent] income group (under $100,000 for example), the plan can be financed without raising taxes on households with income below $200,000. We basically said that in the original paper.”