New York City Mayor Michael Bloomberg appeared at the Center for American Progress today to lay out a purported middle-ground plan for deficit reduction, as the congressional super committee tasked with finding $1.5 trillion in deficit savings seems headed for deadlock. Bloomberg’s plan, which distances itself from both Democrats and Republicans, embraces the cuts laid out in the Bowles-Simpson deficit commission’s plan, plus a significant amount of new revenue, for a ratio of revenue to spending cuts of roughly one to one.
To be sure, there is much to disagree with in Bloomberg’s remarks. For instance, there is no reason to embrace the Simpson-Bowles proposal to raise the retirement age for Social Security. And contrary to Bloomberg’s suggestion, the U.S. does not, in fact, resemble Greece at all. Moreover, uncertainty is not actually holding back job creation and calling for the rich to pay their share is not “class warfare.”
However, Bloomberg’s embrace of a one-to-one spending cut to revenue ratio places him significantly to the left of just about anyone in Washington. Even the Democrat’s offer to the super committee has a ratio of $6 in spending cuts for every dollar in revenue. And the largest chunk comes from his suggestion that all of the Bush tax cuts be allowed to expire:
All of us should help carry the load – and there is actually a very straightforward and achievable way to do that: Allow the Bush tax cuts to expire at the end of 2012, not just for high-income earners, as the President has proposed, but for all tax brackets. [...]
Opponents will yell and scream about taxes and cuts destroying the economy. But the same people said the same thing in 1993, when President Clinton and Congress adopted those rates as part of a major deficit reduction plan. And I think everyone would agree that turned out pretty well.
Income taxes here in the United States are lower than in most of the developed countries we compete with and if we return to the Clinton era rates, they’ll still be lower. So there would be no disincentive for foreign entrepreneurs to come and create businesses and jobs here.
It’s certainly not necessary to let the Bush tax cuts for the lowest-income Americans expire, since that would mean tax increases for those who can least afford it, but the revenue ratio Bloomberg is aiming for is laudable. He also came out for closing the carried interest tax loophole, an unforgivable giveaway to the wealthiest hedge fund managers.
While he blamed both parties for the nation’s budget dysfunction, he went on to note that the parties agree on a series of proposals, all of which are conservative proposals that the Democrats have moved right to embrace. The pox on both their houses rhetoric belied the fact that Democrats have made huge concessions to Republicans during deficit negotiations while getting next to nothing in return.
Last year, Bloomberg called for an extension of all of the Bush tax cuts — including those for the richest 2 percent of Americans — saying that the economy needed more time to recover. Now, he has rightly recognized that revenue needs to play a big role in any deficit reduction package. If Republicans in Congress adopted Bloomberg’s approach and came to the table with such a plan, even with all its problematic proposals, it would indicate that they were serious. Instead, they keep playing pretend, suggesting fake revenue and crippling the social safety net.