I’ve said this before. But it bears repeating, because the cloud of obfuscation, finger-pointing, and confusing reporting on the deficit supercommittee’s machinations is so dense that the essence of the situation is getting completely lost.
So here goes. This, in a nutshell, is why the supercommittee is deadlocked:
1) Republicans believe that the better policy outcome would be for the wealthy to pay less in taxes towards deficit reduction.
2) Democrats believe that the better policy outcome would be for the wealthy to pay more in taxes towards deficit reduction.
And that’s all there is to it.
This isn’t a glib or partisan explanation. It’s a factual description of the central disagreement from which everything else flows.
The above is true even if you accept the GOP premise that they’ve made a concession by agreeing to new revenues, via closing loopholes and doing away with deductions. After all, that is a concession, in the sense that the original GOP position was that any new revenues of any kind are an automatic nonstarter.
But even if you grant this concession, it’s still true that under the GOP proposal, the wealthy would end up paying less in taxes towards deficit reduction than they would if we did nothing. That’s because the GOP proposal would also require that the Bush tax cuts be made permanent.
It’s true that the GOP concession on revenues would mean that the reduction in taxes for top earners would be somewhat less than it otherwise might be if we just made the Bush tax cuts permanent and didn’t do anything on revenues. But the bottom line is that under the GOP proposal, the rich would still pay less in taxes towards deficit reduction than they would if we didn’t do anything, and the Bush tax cuts expired, as stipulated by current law. So the GOP concession, in essence, is for the wealthy to get a smaller tax cut than Republicans would prefer.
By contrast, Dems think the wealthy should pay more in taxes towards deficit reduction than they do now. The latest Dem offer to Republicans was largely in line with the amounts of spending cuts and new revenues Republicans want. But Republicans rejected it, in part because the Dem proposal didn’t make the Bush tax cuts permanent, which Republicans immediately labled a tax increase.
So, to recap: One side thinks the rich should pay less towards deficit reduction. The other side thinks the rich should pay more towards deficit reduction. Sure, there are other differences of varying degrees of seriousness. But that's the situation in a nutshell.