Latest Super Committee Proposals Steer Clear of Fiscal Responsibility
by Craig Jennings, 11/16/2011
Members of the Super Committee appear as far apart as ever when it comes to agreeing to a deal that would reduce the deficit by $1.2 trillion over the next ten years and the latest offer from some Democrats on the committee indicates that if a deal does actually win approval, it will be deeply irresponsible. A deal of this sort would maintain current inequities in the tax code while slashing funding for public protections and health care programs that are vital to working families and retirees.
In any negotiation, there are two poles – one from each side of the bargaining table. Eventually, a bargain is struck that falls somewhere between the initial positions' of the parties. For example, one can look at a plan put forth by the Super Committee's Republicans last week as their current bargaining position. The Center on Budget and Policy Priorities notes that this plan:
...seems designed to make only a modest revenue contribution toward deficit reduction and then to take revenues off the table for the larger rounds of deficit reduction that must follow. Moreover, even while yielding modest savings, the revenue component would make the package less balanced by conferring large new tax cuts on the wealthiest Americans while forcing low- and middle-income Americans to bear most of the plan's budget cuts as well as its tax increases.
This is a plan that prioritizes the concerns of the wealthy over the needs of the rest of the nation. From the other side of the table – the nominally progressive side – the Democrats responded with a plan that unfortunately shares some negative characteristics of the Republican proposal.
While the Democratic plan would collect more revenue than the Republican one, it appears to do so in a way that moves the overall burden of plan onto the backs of middle-class families by cutting $1 trillion in spending that supports health care, education, and public protections while preserving current tax levels for the wealthy and corporations.
The tax changes that Democrats proposed would raise $1 trillion over the next decade, with $350 billion coming from "miscellaneous revenue provisions" and $650 billion to be generated through a revenue package created by Congress's standing tax-writing committees. This package, however, would have to adhere to a few stipulations that do nothing to shift responsibility to the wealthy and corporations:
- An assumption that all of the Bush tax cuts are extended
- Limits the top tax bracket to 35 percent, which maintains a large Bush tax cut for the wealthy
- The tax code remains "as progressive as current law"
- Corporate taxes are reformed to "enhance competitiveness"
That Democrats would like to see the tax code remain “as progressive as today” is cold comfort. Upper-income households have seen their tax rates drop much faster than the lower- and middle-classes over the past 60 years, indicating that our "progressive" tax code isn’t nearly progressive enough. In addition, limiting the top bracket to 35 percent would lock in the Bush tax cuts for the wealthy. "Enhancing competitiveness" for corporations is simply code for rearranging the myriad tax breaks and assorted other goodies handed out to corporations through the tax code without actually asking corporations to help maintain the economic system that has allowed them to stockpile record-setting levels of cash.
If Republicans remain loyal to their corporate and wealthy constituents and if Democrats continue to offer plans skewed away from national priorities, the resulting “middle ground” for a deal will be a very bad place. As the clock moves closer and closer to the Nov. 23 deadline for the Super Committee vote, chances of deal continue to fade. However, without an agreement, some $1 trillion in automatic, across-the-board budget cuts will take effect beginning in 2013, also punching holes in those government programs that prevent foodborne illnesses, ensure the safety of workers, aid victims of natural disasters, repair our crumbling infrastructure, and protect the environment.
If the Super Committee cannot come to agreement, Congress should be thankful that a bullet was dodged, reverse the triggered budget cuts, and, going forward, consider the priorities of the nation as whole, not just the priorities of a well-financed subset of special interests that disproportionately influence the federal budget.