Sen. Bob Corker (R-Tenn.), who is retiring after next year, raised the stakes on what he expects from the nascent GOP tax reform plan Wednesday, saying he would not vote for a plan that was temporary or raised the deficit.
Speaking at the Senate Budget Committee’s markup of the budget, which will unlock the process Republicans want to use to pass the reform, Corker said he would not vote for a final bill unless it ”reduces deficits, and does not add to deficits with reasonable and responsible growth models. And unless we can make it permanent, I don’t have any interest in it.”
That common-sense statement — don’t add to the gargantuan debt and don’t kick the can down the road, forcing some other Congress to pay for it — is about the most “conservative” statement we’ve heard since the budget sloganeering began. How so?
- It’s fiscally sober. Deficits matter.
- It’s intellectually honest (i.e. embraces objective reality) in denying that cuts pay for themselves. Corker rightly dismisses the notion that any tax plan will generate 6 percent growth.
- It refuses to off-load to future generations the responsibility for budget discipline. This Congress needs to deal with the budget ramifications of its own tax plan.
- And in true conservative fashion, Corker maintains that the status quo is better than a bad bill. Like a doctor, “do no harm” is an appropriate legislative motto.
I might add to these observations that no plan should give outsize tax savings to the rich, a recognition of the social and political cost of widening income inequality.
Now, if a few of Corker’s other colleagues agree with his limits, not only would the tax “reform” bill the White House put out be off the table, but so would most other tax-cutting ideas, because they would likely add to the deficit. Without substantial tax increases and removal of deductions in other areas, a bill with cuts of the magnitude Republicans want would bleed revenue.
We’ve already seen how eliminating deductions faltered when blue-state Republicans raised a fuss about eliminating the deduction for state and local taxes. Moreover, some thoughtful conservatives object to wiping out that deduction on federalism grounds. Stan Veuger of the American Enterprise Institute writes, “The central, federal authority should play a subsidiary role in our society, only to be activated when local communities cannot solve their collective-action problems independently. Our tax code should reflect this idea both as an expression of our values, and to ensure that local governments do not see their ability to raise revenue crowded out by federal legislators.”
So where does that leave us on a tax bill? Republicans could very well fail entirely, as they did on health care. They could very well go into the 2018 midterms with zero significant legislative accomplishments.
Alternatively, they might follow the suggestions of groups such as the Committee for a Responsible Federal Budget, which argues:
Instead of relying on magic bullets and fairy dust to pay for tax cuts, policymakers should ensure rate reductions do not add to the debt. Instead, they should focus on pursuing comprehensive tax reform as has been proposed by numerous commissions, committees, and tax experts from across the political spectrum.
By repealing tax preferences, broadening the tax base, and reducing rates, tax reform has the potential to reduce distortions, improve simplicity and fairness, and grow the economy more – and in a much more sustained way – than tax cuts.
In 1986, Republicans and Democrats came together to agree on a package that cut some tax rates almost in half but also broadened the base enough to ensure revenue neutrality. This model will do more to grow the economy – especially for future generations – than simple tax cuts.
That would be less politically satisfying for Republicans, whose economic philosophy has become almost exclusively about tax cuts (the bigger, the better). This more restrained approach, evocative of the 1986 tax plan, by contrast, might please not only Corker but also many Democrats. For once, the GOP might try going to the Democrats first, before exhausting themselves and disappointing their base with grossly irresponsible proposals that have no chance of success.