Atrios is right: the idea that someone can be “serious” about the deficit while wanting to extend historically low tax rates is ridiculous. But that’s only true if you think yesterday’s Bowles-Simpson recommendations for deficit reduction had anything to do with deficit reduction.
Clearly they don’t. They attempt to reduce the deficit by lowering tax rates, and they have a long and detailed section about fixing the relatively innocuous problem of Social Security’s long-term funding gap while giving almost no space to the far bigger problem with Medicare. So I really don’t think that’s the point of the proposal. Yes, there are some decent ideas, like the cuts to military deployment overseas, better tracking of Medicare and tax fraud, raising the gas tax to pay for infrastructure, reducing the mortgage-interest deduction and cuts to Big Ag subsidies. But they are all window dressing, bait if you will.
The killer app here is the spending and revenue cap. This is what will basically stop progressive governance permanently. Instead of saying “We as a society want to do certain things for our citizens, and we want to pay for them,” this says that you can only do so much, up to about 21% of GDP, before you have to stop. This commenter at Josh Marshall’s place noted it right away:
Doesn’t that exceed the mandate here? We are looking to these guys to tell us how to bring the budget into balance, not what the role and size of government ought to be. I would think liberals and conservatives ought to be able to agree in saying, who the hell are these guys to put their finger arbitrarily on the number 21% and tell us that’s where it should be (I’d assume conservatives would like to see it lower, and I don’t necessarily disagree with the number, but don’t know why we’d set it in stone)? Its like my accountant telling me how much my income should be, in addition to how I should balance my family budget.
We don’t have to guess about the impact of a spending cap. Colorado had one in place for a number of years, and when California tried to enact one through initiative in 2009 I wrote about it a lot. Within a few years, spending on education, health care, and practically all other measures of government dropped from the middle of the pack relative to other states to almost dead last in every category. By 2005, the business community forced Colorado to temporarily suspend the cap to relieve the tax-starved state. That merely allowed Colorado to maintain current services. Adding new benefits or services was completely off the table and in fact impossible.
That’s the real goal here. . . . [cont’d.]: to permanently shrink government. You could not run the Affordable Care Act under the proposal of capping revenue and the growth of federal health expenditures at GDP+1%/year after 2020. You certainly couldn’t run anything improving upon it. You could not run a cap and trade system, even if like health care it was paid for. If revenues are capped, you wouldn’t be able to take in money from a carbon tax or a financial transaction tax without reducing income tax revenues, effectively defeating the purpose.
Some would say that there’s no enforcement mechanism for the cap, and that one Congress cannot be bound by another in terms of budget levels. But the enforcement mechanism would be the announcement of the numbers themselves, and the Village self-policing that would go on if any Congress dared exceed it. There would be enormous pressure to stay within the confines of a report passed by Congress and signed by the President.
And that’s why, contrary to those world-weary types who think this thing cannot pass, we should fear this proposal. Sooner or later, Republicans will come around to the fact that this deficit reduction plan uses 75% spending solutions and 25% revenue solutions, and then locks those in over time to make any increases impossible. You can already see this in the initial reviews. In fact, they’ve already started the pivot to saying that 21% of GDP for spending is too high. And then you have willing dupes like Kent Conrad saying that he’d be willing to sacrifice a political career for this plan. He’d be sacrificing a political party.
The most frightening part of the entire recommendations is the budget cap. Not the Social Security cuts, not the increases in soldier health care costs and reductions in pay, not the inexorable move toward a flat tax. All of them are bad. But the budget cap would basically end the entire argument between the two parties. Permanently.
UPDATE: The President says we have to “get the facts” before shooting down this proposal. This proposal cuts taxes on the rich and ensures they could never rise, nor could government do anything beyond the status quo ante in support of its citizens, again. I have enough facts.