A “Gang of Six” in the Senate — Republicans Coburn, Crapo, and Chambliss, Democrats Durbin, Warner, and Conrad — is working to create legislation that would put many of the Simpson-Bowles deficit-reduction proposals into effect. That means raising the Social Security retirement age to 69, reducing Medicare benefits for higher-income oldsters, and raising taxes by getting rid of the mortgage-interest deduction and other special-interest tax breaks.
The Simpson-Bowles plan is by no means perfect — no more perfect than recent Republican efforts to make modest cuts in non-defense discretionary spending, no more perfect than Paul Ryan’s Roadmap. But each of those imperfect options represents a step in the right direction — which is to say, a step toward national solvency.
The tax part of the plan is especially good, in my view, even though it is a net tax increase for the country. The proposal would lower overall income-tax rates in exchange for eliminating a lot of special-interest tax breaks, notably the mortgage-interest deduction. The mortgage-interest deduction is a destructive force on its own, encouraging would-be homeowners to take on larger debts than they should, and to pay more interest than they should, contributing significantly to the inflation of the housing bubble and the subsequent financial crisis. It is difficult to imagine that as many people would have signed up for interest-only mortgages without a tax code that richly subsidizes them. Getting rid of it would be a good idea regardless of revenue considerations or tax-rate considerations; getting rid of it in exchange for lower income-tax rates and $4 trillion off the deficit (I know, I know — there’s a leap of faith in there, but if we’re going to spend $1, we have to tax $1) seems to me a very good deal.
The lower corporate tax is worth having, too.
All that being written, a note: This is not the most inspiring group of senators to be found. I think highly of Senator Coburn but have my reservations about any plan that leans heavily upon Senator Durbin.
In any case, I think the Republicans have already missed an opportunity on this one: An Obama-appointed commission’s bipartisan chairmen produced a program with real cuts and real improvements to the tax code — why not run with that? Why not get what’s worth getting out of Simpson-Bowles and then push for the next round? They are getting a second bite at the apple with the Gang of Six, and they should take it.
— Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, just published by Regnery. You can buy an autographed copy through National Review Online here.