Few word pairings give me less reason for optimism than “bipartisan commission.” Too often, it’s just a tool for politicians to agree not to do anything — or at least not anything good — about a problem, and then not to blame each other for the outcome.
That said, I’m encouraged by the first draft of a plan to cut our federal budget deficit and shrink the national debt, released Wednesday.
The number crunchers will now sharpen their pencils and tell us whether the math behind these surprisingly concrete proposals really works out. At this point, it’s safe to say the plan isn’t perfect, but it’s a far better starting place than most of us anticipated.
We should give close scrutiny to the spending cuts put forward. There is a tendency in Washington, on both sides of the aisle, to increase spending by, say, 4 percent rather than the 5 percent originally budgeted and call it a “spending cut.” The budget, at 21 percent of the economy under this plan, would remain too large.
That’s not good enough. One small but encouraging sign is that the plan calls for an actual reduction of about 10 percent in today’s federal civilian work force.
Looking specifically at the tax reforms put on the table, we have an opportunity to move sharply in the direction of flatter, lower rates covering a broader tax base. It’s an opportunity to stop using the tax code to subsidize favored behaviors or constituencies. We can’t afford to miss it.
Don’t look at the loss or reduction of tax breaks such as the mortgage-interest deduction in isolation. There’s a lot to be said for removing these kind of tax incentives in favor of lower marginal income-tax rates across the board.
In fact, if you want the federal government to stop interfering with the housing market, phasing out this deduction is one way to get there. (Tackling Fannie Mae and Freddie Mac is another crucial way, but that was beyond the scope of this commission.)
Speaking more generally, conservatives should applaud a move toward a flatter, simpler, broader tax code.
We have largely won over public opinion with the argument that low marginal tax rates foster economic prosperity. But we have not been as successful — yet — in making the case for also flattening and simplifying the tax code.
In part, we have ourselves to blame. By focusing so much of our rhetoric on “tax cuts,” we have made it easier for politicians to claim that any reduction in anyone’s taxes is good.
But most economists will tell you that not every tax cut is created equal. Standing by as Democrats and Republicans alike have abused our message in this way has lent credence to the idea that “tax cuts” chiefly benefit the powerful or politically connected.
Now, we have a chance to right that wrong. In fact, it’s instructive that most conservative groups and pundits have been slower to judge the proposal than the likes of Nancy Pelosi (who quickly called the plan “simply unacceptable”) and the head of the AFL-CIO (who called it a “drop dead” message to the middle class) have been.
Is a tax code with three brackets (we now have six) flat enough? Is it simple enough if one or two of the most popular and widely used deductions remain in place?
Those questions will be squarely in the discussion going forward. But merely having the discussion is most welcome.