Back in June, I spoke to Rep. Jan Schakowsky (D-IL), one of the members of President Obama’s debt commission, who said that the commission was likely to “deadlock,” because its Republican members were ruling out any and all tax increases as part of a comprehensive budget solution. “[Conservatives] give some lip service to ‘everything should be on the table,’ then, when it actually comes to what kind of revenue can we raise, are closing that door and taking it off the table,” she said.
Now, one of the commission’s Republican members, Sen. Judd Gregg (R-NH), is telling a similar tale:
Sen. Judd Gregg (R-N.H.) says there is no chance fellow Republicans on the president’s deficit commission will endorse tax increases, which also means Dems would never offer up the spending cuts needed for a bipartisan deal. But Gregg says the commission may get behind tax reform that lowers rates, closes loopholes and is revenue-neutral.
To his credit, Gregg has been unwilling to rule tax increases as out of bounds for the commission. “Everything has to be on the table – there’s no question about that,” Gregg has said. However, it seems that he doesn’t have much company within his own party.
As CAP economists Michael Ettlinger and Michael Linden laid out, just trying to get the budget into primary balance by 2015 without any tax increases requires draconian cuts in important programs, including “big cuts to highway funding, cuts to medical research, the Federal Aviation Association, defense, Pell grants and much more.” The last time that the federal budget was balanced, revenues amounted to 20 percent of Gross Domestic Product, but even under President Obama’s proposed budget, they never get above 19 percent (and actually fall in 2015 from their 2014 high).
Taxes are also at a fifty-year low, so contrary to Republican assertions, revenue is definitely part of the problem and needs to be part of the solution. But the refusal of Republicans to endorse tax increases has also extended to portraying the closing of corporate tax loopholes and cutting corporate tax subsidies as “increasing taxes.” Due to the convoluted corporate tax code, the U.S. raises below average corporate tax revenue, despite having a higher statutory rate than most industrialized nations.
Under President Obama’s budget, corporate taxes will amount to just 2.1 percent of GDP in 2015, compared to 9 percent for personal income taxes. If the tax code can’t even be combed to get rid of some of the egregious corporate giveaways it contains, the budget fix is going to be foisted onto the backs of working people via cuts to the programs upon which they depend.