First Thoughts on Bowles-Simpson
I am surprised that the president’s deficit-reduction panel has produced such a sensible set of proposals: Eliminating tax write-offs while lowering tax rates is a big tax hike — a $100 billion-a-year tax hike, maybe more — but it is the right kind of tax hike, in my view. The simplification of tax filings for most Americans will provide additional private savings in the form of lower compliance costs. Raising the Social Security retirement age, reducing Medicare payments, capping federal revenues, chopping into discretionary spending — all are welcome. I do not think that the authors have “harpooned every whale” as Alan Simpson put it (Obamacare still haunts the fiscal depths), but it’s a very solid start, one that Republicans can pick up and run with.
Alas, I am destined to spend my days disagreeing with Ramesh about the child tax credits — I think taxes are about revenue, not about social engineering — and I very much like the idea of simply getting rid of special exemptions categorically, with a meat ax, rather than reducing them surgically with a scalpel.