A week since it became apparent that Congress’s supercommittee would not conclude a deficit-cutting deal, Republican and Democratic members are still explaining why their effort failed. And while many people may no longer care, the accounts show how far apart the two sides were, and how difficult it will be to make a deal to reduce the federal deficit and start chipping away at the nation’s debt of more than $15 trillion.
In a letter that appeared in The Washington Post’s Opinion section on Sunday, the six Republican members, including Reps. Dave Camp and Fred Upton of Michigan, said the most significant development during the talks was a Republican proposal that would raise “significant new tax revenue” while reforming the tax code.
“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,” the Republicans said.
“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. We believe this lowering of the rates and broadening of the tax base would have spurred economic growth, created jobs and, in the process, generated billions more in revenue from growth in the economy.”
Writing for the Democrats on the Joint Select Committee on Deficit Reduction, Rep. Chris Van Hollen of Maryland said the Republicans’ description of the plan was “misleading”.
“In reality, their willingness to raise $250 billion of that revenue was conditioned on Democrats agreeing to make permanent more than $800 billion of the Bush tax cuts for the wealthiest Americans, which are scheduled to expire at the end of next year – thereby locking in $550 billion of tax breaks for the top 2 percent of earners,” he wrote.
“Their proposal was further conditioned on reducing tax rates while dramatically cutting various deductions. Analyses by the nonpartisan Joint Committee on Taxation and other independent groups indicate that the Republican plan to drop the top rate from 35 percent to 28 percent, while slashing deductions and preserving the current low rates on capital gains, would very likely increase the tax burden on many middle-income families and give the superwealthy a massive tax cut.”
It’s sobering to think that may be as close as the two sides came to an agreement.