“We plan to operate from an assumption that all special provisions are out unless there is clear evidence that they: (1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives,” said the letter written by Senate Finance Committee Chairman Max Baucus (D-Mont.) and his Republican counterpart, Sen. Orrin G. Hatch (Utah).
Baucus and Hatch assured senators that “we both believe that some existing tax [breaks] should be preserved in some form,” and they gave their colleagues a month to make the case for preserving favored breaks. But independent analysts said the blank-slate approach, which has been adopted by House Ways and Means Committee Chairman Dave Camp (R-Mich.), increases the odds that some expensive policies could be pared back if the push for reform gains traction.
Baucus and Camp say they are aiming to complete the overhaul by the end of 2014, but neither President Obama nor congressional leaders have shown much enthusiasm for the task.
A lobbying frenzy
Thursday’s announcement nonetheless touched off a frenzy among tax lobbyists already anxious about the fate of specific perks. The American Society of Pension Professionals and Actuaries issued a press release defending tax deferrals for retirement savings. And nonprofit organizations vowed to step up an already intensive campaign to protect the deduction for charitable contributions.
“We are extremely concerned that it’s in danger,” said Gloria Johnson Cusack, executive director of Leadership 18, an alliance of chief executives of the United Way, the American Red Cross and other major nonprofits. “Until we hear people saying it’s off the table, we’re going to continue to be very aggressive.”
On Capitol Hill, the announcement sparked quiet grumbling among some Democrats, who would be forced to defend favored breaks, including new subsidies for the purchase of health insurance enacted as part of Obama’s landmark health-care initiative. But it drew praise from many Republicans. And advocates of debt reduction commended Baucus and Hatch for embracing a debate over trade-offs, even if their ability to jettison popular perks remains far from clear.
“Starting with the Zero Plan doesn’t absolve policymakers of the hard choices, but it surely does change the presumption by turning the tables on defenders of the status quo and forcing them to make the case for their particular tax preference,” said a statement released by Erskine Bowles and Alan K. Simpson, the co-chairmen of Obama’s fiscal commission.