Plan from Toomey, Other Republicans Not a First Step Toward Balanced Deficit Reduction
Posted by: CBPP
Posted in: 2001/2003 Tax Cuts, Businesses, Congressional Action, Deficits and Projections, Federal Budget, Federal Tax, Health Policy, Individuals and Families, Insurance Coverage, Medicaid, Medicare, Process, Taxes and the Economy
We issued an analysis today of the recent proposal by several Republican members of Congress’ deficit-reduction “Supercommittee.” Here’s the opening:
Senator Pat Toomey and other Republicans on the Joint Select Committee on Deficit Reduction (“Supercommittee”) portray their new offer to raise close to $300 billion in revenues (under a plan to reduce deficits by about $1.5 trillion over ten years) as a significant concession, and some observers have suggested it represents a welcome first step toward a balanced deficit reduction plan to put the budget on a sustainable path. But a closer examination of the proposal raises grave concerns and indicates that, in fact, it adds little balance.
It uses savings from closing tax loopholes and narrowing other tax expenditures mainly to set tax rates permanently at levels well below those of President Bush’s tax cuts, and to make permanent both the highly preferential treatment of capital gains and dividend income under the Bush tax cuts and the temporary hollowing out of the estate tax for estates of the wealthiest one-quarter of 1 percent of Americans that Congress enacted in late 2010. Consequently, the proposal seems designed to make only a modest revenue contribution toward deficit reduction and then to take revenues off the table for the larger rounds of deficit reduction that must follow. Moreover, even while yielding modest savings, the revenue component would make the package less balanced by conferring large new tax cuts on the wealthiest Americans while forcing low- and middle-income Americans to bear most of the plan’s budget cuts as well as its tax increases.