In an editorial in the Washington Post, the Republican members of the failed Super Committee ripped the Democrats for insisting on no less than $1,000,000,000,000 in additional taxes between FY2012 and FY2021 versus the Congressional Budget Office extended-baseline between 2012 and 2021. They also admitted that the $250,000,000,000 in additional taxes versus the CBO extended-baseline proposed by Sen. Pat Toomey (Real Disappointment-Pennsylvania) was but half of the additional tax increase they were willing to give the Democrats.
Before I get to the details of that, however, I do have to deal with the disingenuous part of the op-ed:
Why do Republicans believe our proposal is preferable to the automatic 2013 rate increases? Apart from the fact that our economy could not withstand the almost $4 trillion tax increase, it would directly and adversely affect small-business investment decisions. Business decisions are highly sensitive to the rates of the capital gains, dividends and death tax, as well as marginal tax rates. That’s why Republicans would leave them alone and raise revenue instead by limiting personal itemized deductions and credits that have much less impact on investment decisions by small-business owners.
That $3,949,000,000,000 tax increase from not extending the parts of current tax policy the Republicans wanted extended, as well as another $761,000,000,000 tax increase from expiring/expired tax policy the GOP didn’t mind seeing expire, was already baked into the “debt deal” that created the Super Committee. While the method of getting the $39,221,000,000,000 in revenue the CBO August 2011 baseline anticipates between FY2012 and FY2021 was not specified in the “debt deal”, the fact that the CBO extended-baseline is the starting point means that the end result, and its attendant $4,710,000,000,000 tax increase, has been stipulated to by anybody talking about “additional” tax revenues.
As for the “much less impact”, that’s a bunch of Bravo Sierra. The “rich” and “near-rich” aren’t exactly dumb; they would have quickly realized that what the federal government put in their right pocket, they vacuumed out the left at a faster rate, and the non-profits who depend on donations from the “rich” and “near-rich” would have been hit hardest.
Now to the other third of the GOP betrayal on taxes:
The essence of the plan was to dramatically reduce the deductions and credits wealthier taxpayers can claim to reduce their tax liability. That would generate enough revenue to both permanently reduce marginal rates for all taxpayers and provide more than $250 billion for deficit reduction. Added to other receipts, taxes and fees, the Republican plan amounted to more than $500 billion in deficit reduction revenue and $900 billion in spending reductions.
In order for an amount to be counted as “deficit reduction revenue”, it would have to make the FY2012-FY2021 revenue number larger than $39,221,000,000,000. Fortunately, since the resulting reduction in debt service is also scored for the purposes of debt reduction, any tax hike is slightly less than the amount of deficit reduction. While I haven’t seen any actual scoring of the final GOP plan, assuming it would raise taxes equally each year on an inflation-adusted basis, it would need to result in roughly $478,000,000,000 in new taxes beyond what was already baked in.
That brought the total amount of taxes the Republicans were willing to offer to $39,699,000,000,000, a $5,188,000,000,000 increase from extending current policy, and (using static analysis) a tax take of 20.9% of GDP in FY2020 (where it would be in FY2021 with no tax-code changes and no economic collapse) and 21.1% of GDP in 2021, both new national records. That, however, was not enough for the Democrats. From the op-ed one last time:
At no time in the negotiations did the Democratic committee members drop their insistence that, one way or the other, any deal had to include a trillion dollars in new taxes.
Adding $1,000,000,000,000 to the CBO extended-baseline revenue would bring taxes to $40,221,000,000,000, a $5,710,000,000,000 increase from extending current policy. Assuming the economy doesn’t enter a recession like it has the 5 times since World War II that the federal tax take broached the 19% GDP barrier, the new national record of 20.9% GDP would have been reached in FY2017, and reset every year thereafter with it hitting 21.3% GDP in FY2021.
As for the percentages in the title, the GOP offered up just shy of 89.5% of the tax revenues and, compared to extending current tax policy, 90.9% of the tax increases, the Democrats demanded. Indeed, the GOP continued its decade-long assault on the near-rich by targeting them and only them for removal of tax deductions while holding the poor essentially harmless, and the ‘Rats couldn’t hear them over Queen’s “I Want It All”.
Revisions/extensions (8:42 am 11/28/2011) – Emperor Misha links and has a kick-ass close:
So yeah, the collapse of the StuporCommittee was really the best thing that could have happened and, furthermore, it is pretty clear to us that there is a LOT more housecleaning that needs to be done in the GOP next year.