Cooper-LaTourette Plan Not as Balanced as Bowles-Simpson: Take Two

March 29, 2012 at 12:58 pm

I blogged yesterday about the Cooper-LaTourette budget plan and its proponents’ claim that it reduces deficits through a mixture of two-thirds spending cuts and one-third tax reform — the same ratio as the Bowles-Simpson plan. I offered one explanation of why that’s not true.  Here, let me offer another.

As I wrote yesterday, Bowles-Simpson does indeed have roughly two dollars in spending cuts for every dollar in tax increases — if you use a baseline that assumes that President Bush’s tax cuts for upper-income taxpayers expire (and if you count the savings from lower interest payments as a spending cut).

The Cooper-LaTourette budget purports to have the same ratio of spending cuts and tax increases as Bowles-Simpson, but it relies on a different baseline to get there — and that makes all the difference in the world.

What happens, however, if you apply Cooper-LaTourette to the baseline that Bowles-Simpson uses?  The ratio of spending cuts to tax increases becomes roughly 7:1.  So, as I wrote yesterday, the Cooper-LaTourette plan is far more tilted toward spending cuts, and far less toward tax increases, than Bowles-Simpson.

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More About James Horney

James Horney

Jim Horney is the Vice President for Federal Fiscal Policy at the Center on Budget and Policy Priorities, where he specializes in federal budget issues.

Full bio | Blog Archive | Research archive at CBPP.org

1 Comments Add Yours ↓

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  1. 1

    Great explanation. It did become clear that the cuts will be on spending, and the implications of that is a bit worrisome.



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