The Super Committee continues to meet and pretend like they’re going to come up with an end product in three weeks. We’ve learned a bit more about the Republican offer. We know that the Democrats’ plan was no great shakes, but needless to say, the Republican plan is worse, particularly in the area of revenues. Republicans did not include no revenue increases in their plans, but not by much, as the Center on Budget and Policy Priorities shows:
The new Republican plan provides for slightly more than $3 trillion in deficit reduction over the next ten years, relative to a current-policy baseline that assumes extension of all the 2001-2003 tax cuts. Of that amount, only about 1 percent of the deficit reduction ($40 billion) stems from revenue increases. And, compared to the “plausible baseline” that the Bowles-Simpson Fiscal Commission and the Senate’s Gang of Six used, which assumes expiration of the upper-income tax cuts, the latest Republican plan actually provides for tax cuts of more than $800 billion over ten years.
Via Brian Beutler, above is the chart comparing the Democratic and Republican plans, relative to a current policy baseline. And the baseline is important here: that’s how the Republicans get away with saying they raise taxes in their plan, however small, when in reality it’s a massive tax cut that goes mostly to the rich. And it’s actually worse than CBPP says; they are factoring $800 billion in tax cuts below a “plausible baseline,” but if you use a current law baseline, it’s actually more like $3.6 trillion.
Republicans actually claimed more revenue increase through a process called “dynamic scoring,” also known as “lying,” where an assumption is made that lower tax rates automatically spur economic growth, leading to more revenue coming in. The Clinton and Bush years should obliterate the argument for dynamic scoring, but Republicans soldier on.
I don’t know that we should focus a heck of a lot on these plans. Pat Toomey, a member of the committee, admitted that the two sides have a “fundamental divide,” so the notion that anything is going to come out of the committee isn’t really backed up by experience. I know Erskine Bowles can wank about the Medicare eligibility age all he wants, but he’s free to run his mouth because he doesn’t represent anybody. Those who do understand the political implications of austerity, or who are on the right and against raising taxes, pay more attention (at least to the prospects of re-election).
Here’s the important point: so-called “failure” in the Super Committee is simply not consequential. Moody’s, the credit rating agency, proved that today:
The fate of the nation’s AAA credit rating does not hinge solely on the final product of the deficit supercommittee, according to Moody’s Investors Service.
The credit rater said Tuesday that while there is a “significant chance” the panel will fail to reach a deal, the ultimate outcome of its work will not be “decisive” in assessing whether to keep the nation’s credit rating at AAA.
Moody’s said it is going to be looking at the composition of any deal reached in assessing the nation’s credit, and any positive momentum toward dealing with the deficit would be recognized — whether it comes from the supercommittee or the automatic triggers that are supposed to kick in if a deal falls through.
“Agreement by the [supercommittee] and the Congress as a whole on a larger amount of deficit reduction would be favorable, but the smaller amount triggered by the spending caps is still a step in the same direction,” the rater said in a new report. “Thus, the committee outcome will not necessarily lead to any change in our rating stance.”
As the prospect of failure grew large, a lot of austerians threatened catastrophic consequences. As Moody’s shows, there are pretty much no consequences, at least as far as credit ratings are concerned.