'Gang of Six' Comes Out With Deficit Reduction Plan

[Torie]

Is this at all dissimilar from what a majority of the Deficit Commission recommended?  It seems to follow that template from what little I know, with some procedural tweaks. Anyone sensible "knew" that this is where this puppy would probably end up - sooner or later.

[Torie]

From Klein:

"But though some of that money is going to lower brackets, the reforms must raise more than $1 trillion in new revenue — including $133 billion for infrastructure. The plan also appears to build the expiration of the Bush tax cuts for income over $250,000 into the baseline. So the total amount of revenue raised might be closer to $2 trillion, if you're counting against where we are now. Of course, if you count against the expiration of the Bush tax cuts, it's a tax cut of about $1.5 trillion. Finally, the plan also calls for revenue-neutral corporate tax reform."

So if the revenue raised is 2 trillion, but if the Bush tax cuts for those with income over 250K are assumed to expire, then it is a tax cut of 1.5 trillion, we have a 3.5 trillion swing in revenues.  Are the Bush tax cuts for those earning over 250K worth 350 billion per year over 10 years in lost revenue?  That is hard to believe. Am I missing something here?

[Torie]

Here is an article that tries to clarify the confusing language about tax revenues and tax cuts in Congressional public statements and the Klein article.

http://blogs.forbes.com/janetnovack/2011/07/20/how-much-would-gang-of-six-raise-your-taxes/

It seems to be close to a 2 trillion tax increase from a baseline that includes future tax "cuts" that Democrats tend to support, so it is about 50% spending cuts and 50% revenue increases from a baseline that includes cuts from existing law that Democrats support. I am a bit surprised that the 3 Pubbies in the gang of 6 went along with it. The dirty little secret though is that polls are showing that a majority of Americans don't want any cuts in entitlements, so in that sense the Pubbies are boxed, in that in order to avoid a short term hit politically, they need the Dems to sign off on some entitlement cuts.

There is no right or wrong answer to this at the margins. It is a question of priorities and values. The key is however to do it in a way that does not materially truncate future American economic growth, which would be the worst result of all for a host of reasons. The lowering of the tax rates should however accomplish that.  

Reality is a bitch.  And given the aging of the population, longer life spans, and the decline in the competitiveness of the American work force going forward due to our non competitive secondary school educational system, and facing a loss of the prop of talented immigrants going forward as they fine good opportunities now in their home nations more and more, the die I think is somewhat cast. One can kick and scream that it all sucks, but in the end, it will amount to but a fart in a windstorm.

Thanks Anvik for finding the article. It is still a bit confusing, and did not totally connect the dots to my mind as to what is really going on, but it moves the ball forward. I suspect this will set off a war within the GOP. Some elements are going to have a fit.  

[Torie]

Folks may begin to think I am your butt boy Anvik, but facts are facts. To the extent of my knowledge, and my opinion, everything you wrote is accurate and fair and balanced, and of course lucid. I think you have said just about all there is to say.  Well done!