With a Thanksgiving deadline only two weeks away, the Capitol Hill “super-committee” responsible for reducing deficits in a fair-minded, bipartisan and honest manner is on the verge of collapse. Fearful of being blamed for failure — and the enormous reductions that will follow in defense spending, their party’s sacred cash cow — the Republican members suddenly acknowledged that revenue must be raised. They proposed $300 billion in tax reform measures. Compromise seemed possible, if not palatable. With this proposal, Senator Patrick Toomey (R-PA) and his super-committee colleagues proved that they were willing to compromise their original vow to cut the deficit solely by reducing spending.
Upon inspection, however, the Republican plan is nothing more than an audacious attempt to do what they always want to do: It would provide still more favors to their wealthy patrons, a class that includes their own millionaire colleagues, while inflicting pain on everyone else. And it would fall far short of the deficit reductions demanded in Republican rhetoric.
Annoyed Democrats — who have seemed all too eager in recent weeks to offer concessions toward a “grand bargain” cutting Medicare and Social Security in exchange for tax increases — rejected the Republican deal outright.
Why? Because even though the Republicans agreed to raise revenues by closing loopholes, nearly all of that revenue would be used in their plan to pay for extending the Bush tax cuts. This would not only do nothing to close future deficits, but would ultimately make them bigger.
The Center for Budget and Policy Priorities laid out many of the problems with the Toomey plan in a pithy analysis released on Thursday, which showed that it would cut the top-tier tax rate enormously and preserve preferences for capital gains and dividend income, while penalizing lower- and moderate-income taxpayers by eliminating their preferences. Quoting a preliminary estimate by the Joint Committee on Taxation, the CBPP analysis indicates that taxpayers earning more than $200,000 a year would receive tax cuts under the Toomey plan far more generous than they would get if Congress merely renewed the Bush tax cuts that are set to expire this year. At the very top, taxpayers earning more than a million dollars a year would get the biggest cuts from the Toomey plan — which would reward them still further by permanently reducing the estate tax for the top one-quarter of one percent with an extra gift of more than a million dollars.
As usual, Republican affectations of grave concern over the deficit were actually a scrim behind which they hoped to provide still more tax cuts for the wealthiest Americans and slash Social Security, Medicare, and other programs that serve the rest of the nation. That was the true nature of Rep. Paul Ryan’s “path to prosperity,” a plan laid out by the Wisconsin Republican for ending Medicare altogether and replacing it with a cheap voucher plan, while cutting taxes for the top bracket — without significantly reducing the deficit over the next 10 years.
The most mysterious aspect of the deficit debate is why anyone still believes that Republicans believe in balanced budgets.