Former Office of Management and Budget Director Peter Orszag, now vice chairman of global banking at Citigroup, hit the nail on the head when he told Atlantic Media's Ron Brownstein recently, "There is virtually nothing the super committee could plausibly do that could offset the harm from making the [Bush] tax cuts permanent" because of their very large cost.
Some super committee proposals would actually have been damaging to long-term deficit reduction. The plan of Republican Sen. Pat Toomey, for example, would have set tax rates well below the Bush levels and locked them in permanently. Furthermore, it would have devoted the overwhelming bulk of the revenues from reforming tax expenditures to paying for those lower rates. The result would have been that both the large potential savings from tax reform and the potential savings from allowing some or all of the Bush tax cuts to expire would have been taken off the table for the future rounds of deficit reduction the nation will need.
While fiscal commission co-chairs Erskine Bowles and Alan Simpson and the Gang of Six called for cutting rates below the Bush levels, their plans would have raised over $2 trillion in net new revenues, and produced about $5 trillion in deficit reduction overall, relative to the current-policy baseline. By contrast, the Toomey plan would have left most of the needed deficit reduction for the future (it would have achieved, at most, $1.5 trillion in deficit reduction) and secured a scant $300 billion from revenues.
As Orszag noted (and we've said before), a super committee agreement that locked in unaffordably low tax rates and made it more difficult to raise additional revenues in the future would set back the cause of deficit reduction.
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This post originally appeared on the Center on Budget and Policy Priorities' blog, www.OfftheChartsBlog.org.
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Dan Glickman: On the "Death" of the Super Committee
Let me explain the difference between Roosevelt Democrats and Clinton Democrats. See a Roosevelt Democrat knows on an instinctual level BANKS TO BIG TO FAIL and these UNRESTRICTED FREE TRADE agreements are just WRONG!
Let's talk about Neocon Republicans and Reagan Republicans. See Capitol Gains tax is a way to move the economy. Much like the Fed and interest rates. The Neocons give President Reagan a lot of credit for lowering Capitol Gains, they forget he raise it from 2-% to 28% also! President Reagan understood the Federal Government has a gun with 2 bullets in it to control the economy. The Fed and interest rates and Capitol Gains! A prudent President reloads his gun! President Bush was not a Prudent President!
Our economy will suffer for years because of both parties! And it will hurt the poor and middle class the most!