When the President said he would “pivot to jobs” after the debt limit deal, I was skeptical, mainly because there was this Super Committee hanging out there that would be the subject of much consternation, negotiation and debate. That focus would get in the way of the jobs agenda and the attempts to pass the American Jobs Act.
But just a week or so after the President announced his jobs plan in a joint session of Congress, a handful of folks got together to occupy Zuccotti Park. And over the next month-plus, that has been a dominant conversation in the media, reorienting talk of the economy toward inequality and economic justice rather than deficits and debt. Eric Cantor gave a once-aborted speech on inequality, not the deficit. Republicans are signing on to a fake effort in support of increased revenues because of the hammering they were taking on tax fairness. All of this has come out of the voices of dissent across the country, motivated in part by the disconnect between the needs of the people and the obsessions in Washington that were highlighted during the debt deal.
There’s still a Super Committee, to be sure. And Stephen Moore of the Wall Street Journal late yesterday tried to float a proposal to give them something to do. In short, his idea is that Republicans would cap some deductions in exchange for making the Bush tax cuts permanent, an idea that would EXPLODE the deficit:
One positive development on taxes taking shape is a deal that could include limiting tax deductions, perhaps by capping write-offs on charities, state and local taxes, and mortgage interest payments as a percentage of each tax filer’s gross income. That idea was introduced on these pages by Harvard economist Martin Feldstein.
In exchange, Democrats would agree to make the Bush income-tax cuts permanent. This would mean preventing top rates from going to 42% from 35% today, and keeping the capital gains and dividend tax rate at 15%, as opposed to plans to raise them to 23.8% or higher after 2013.
Moore’s biases are apparent in that the top rates are scheduled to only go to 39.6%, and dividend tax rates to 20%. So his thumb’s on the scale. But keep in mind, this would be a budget buster in the trillions, with most of that money going to the rich. And that’s a deficit committee deal.
Fortunately, this is not a formal offer, and Democrats have already rejected it out of hand, according to Brian Beutler. Like the letter on revenues, these are efforts to play nice in public, not serious efforts to find consensus. The other part of this is that something as enormous as tax reform isn’t going to be tackled by 12 members of Congress in two weeks, even if the chairs of the tax-writing committees are on the panel. There was some thought to extending the deadline for the committee to present a recommendation, but that has been rejected by Democrats on the panel.
Jeb Hensarling, the co-chair of the Super Committee and Moore’s only source for his article, acknowledged in the end that “we won’t be high-fiving” each other after the work of the panel is wrapped up. He sighed hopefully that the trigger on defense cuts would somehow be dispensed with down the road. Even the co-chair can’t hide the imminent doom for his committee. Sorry, austerity class.
This doesn’t mean that all is clear. The committee could come up with a lesser solution – maybe a few hundred billion, to reduce the impact of the trigger. And we know that there are some points of agreement that would be really damaging to people. For example, the move to chained CPI, which would cut benefits for Social Security recipients, was in both the Democratic and Republican initial offers on the committee.