My sense in this negotiations is that, if numbers and policy positions are leaking, the two sides are very far apart on a deal. And yesterday we had a lot of leaking, at least on the Republican side.
Here’s what we know. The White House sent a counter-offer to House Speaker John Boehner, one which lowered the revenue target from $1.6 trillion to $1.4 trillion, and which also included a reform of the corporate tax code, presumably of the “lower the rates, broaden the base” style. The Administration has long sought a corporate tax reform, as has probably every one of the many CEOs the President has met with since the election.
If this were a substitute for spending cuts, it would be a frustrating but acceptable trade. It’s amusing to me that these CEOs walked one by one in to meet the President, supposedly out of concern for the nation’s deficit and legacy of debt, and the strongest thing they could come up with was “lower my tax rates.” I think this quote is pretty telling:
“Start at wiping out all of the deductions, figuring out where that tax rate is—whether it’s 25%, 22%, 15%, whatever it is,” said Douglas Oberhelman, the chief executive of construction-equipment maker Caterpillar Inc. “I think all of us are on that wavelength today to begin the process.”
Yeah, NOBODY in the White House has ever proposed a rate as low as even 25%, much less the other numbers. And this obviously has nothing to do with deficit reduction.
But we have a captured government, and if we can swap reducing corporate tax rates for social insurance cuts, I’d take the trade. Unfortunately, I don’t think that IS the trade; I think the White House added the corporate tax piece into the negotiations so that they could get business groups to pressure Boehner on the other points, especially raising individual tax rates. John Engler of the Business Roundtable dutifully carried that out yesterday. So it’s probably a free throw-in.