I’m not fully clear on all the details, but the basic shape of the tax reform proposal from Senators Ron Wyden and Judd Gregg is on the mark. The idea is that you broaden the base by eliminating loopholes and deductions, and in exchange get to lower the rates.
But the question is where can an idea like this go from here. It’s hard to imagine it being taken up in the crowded 2010 legislative calendar. But even besides that, there’s a bigger issue—what will the White House do? We’ve gotten to a point where it’s exceptionally rare to see major legislation actually be shepherded into law without major involvement from the President of the United States. But when Presidents insert themselves into debates both public and congressional opinion become sharply polarized. Rightly now Wyden-Gregg is a wonky bipartisan reform. If Obama starts touting it, Mitch McConnell will start calling it Obama’s massive tax increase, “tea party” morons will see it as a step on the road to serfdom, Glenn Beck will say it’s the worst thing since the Progressives started regulating child labor, and next thing you know GOP support will vanish. Then since certain provisions of the reform would harm certain Democratic-leaning interest groups, the bill will have to be watered down, at which point David Brooks will blame Obama rather than his own friends on the right for weakening a good idea.
We’ve seen this happen with cap-and-trade, which used to be supported by a bipartisan coalition of elected officials who aren’t from coal regions. We’ve seen it happen with mandated, regulated, subsidized private health insurance which used to be supported by a wide array of Republicans. And most recently we saw it happen with the Conrad-Gregg statutory deficit commission. I don’t really see a way out of it.