Yesterday, ex-Gang-of-Six member Tom Coburn released his own deficit reduction proposal, which would combine $8 trillion in spending cuts over 10 years with $1 trillion in “revenue enhancement” through eliminating tax deductions, but also lowering overall tax rates. This may or may not end up being a “tax increase,” depending on which you get more of.
No sooner had Coburn announced his plan than he was back in the old Gang of Six treehouse, excitedly waving everyone over to see what the rest of the Banana Splits had come up with. Lo and behold, it was a new plan that would reduce the deficit by… $3.7 trillion over 10 years.
The ten-year federal budget deficit will be in the neighborhood of $12 trillion under present spending levels. That means the exciting new Gang of Six proposal would reduce it by about 30%. We would roll into 2020 with a national debt of roughly $22 trillion.
Yay. We’re saved.
The same people who told us earlier this year that $38 billion in spending cuts would destroy America, and litter the fruited plain with the bodies of dead women, lined up to endorse this new proposal. President Obama gave it a thumbs up, as did Republican “moderates” like Susan Collins. “More than fifty people went in and out of the room” to view this new Ark of the Covenant, according to Collins, and “everyone felt a sense of relief.”
Well, everyone except the poor chumps who will end up paying off that $22 trillion national debt, but what the hell, some of them aren’t even born yet.
Like Coburn’s plan, this new proposal looks forward to “$1 trillion in revenue through closing loopholes and ending tax breaks, with some of it used for deficit reduction, and most used for rate reduction through tax reform.” Tax simplification could produce enhanced revenue while lowering rates, and simplifying the deduction and loophole maze would eliminate some of government’s power over the populace. However, I’m more skeptical of those claims when I hear Barack “Tax Hikes Or Bust” Obama is cool with the new plan.
The Gang of Six is making a big deal about getting rid of the odious Alternative Minimum Tax. That’s the wealth-sucking rate that kicks in when a citizen tries to claim too many of the incentives and deductions dangled before him by the political class. Senator Kent Conrad (D-ND) claimed this would represent an overall “$1.5 trillion tax cut.” It sounds like he’s counting up a lot of hypothetical rates to get that number. I feel a great swell of doubt that Americans would find themselves paying $1.5 trillion less in taxes after the implementation of this plan.
There aren’t many specific spending cuts outlined in the Gang of Six proposal, which you can read here. Instead, it talks about “ensuring Congressional action to reduce the deficit if the debt-to-GDP ratio after 2015 is not stabilized,” and growth-to-GDP “targets” for rising federal health care spending. In other words, if Congress is still throwing around bags of imaginary money in four years, some really awesome committees will be formed.
The Gang of Six is also counting up billions to be saved from “curbing fraud, abuse, and other wasteful spending,” a bipartisan initiative loudly discussed for decades, but never actually implemented. I also notice the plan explicitly retains things like the Earned Income Tax Credit, a tax rebate for people who don’t pay taxes. So much for “shared sacrifice.”
Conrad is proud that the Gang “added $116 billion in health care-related savings.” Big deal. I can show you how to add over a trillion dollars in health care savings, Senator. You’ll just have to repeal one piece of legislation.
This plan is a sideshow, and it’s embarrassing Coburn would so eagerly sign back on to it, after producing his own superior proposal. It’s telling that so many tax-crazy Democrats are racing to sign onto it. The discussion has definitely shifted, and not in a liberal direction.
Senator Joe Manchin (D-WV) declared, “This morning, the Gang of Six truly became a Mob of Fifty, and I believe this proposal holds enormous promise as a commonsense solution to our long-term debt and deficit.” Sorry, Joe, but the Tea Party didn’t send all those Republicans to Washington to reduce the deficit by 30%. At the very least, we’re going to need it back where it was when Obama found it, and this “Mob of Fifty” plan doesn’t even get us halfway there.