Politics & Policy

Government by Platitude

Some Republicans are getting desperate over the debt-ceiling debate, but we hope not desperate enough to embrace the Gang of Six proposal. It may be the worst of the debt-ceiling compromises placed before them to date. 

The authors allege that their plan will eliminate some $3.7 trillion from the projected federal deficit over the next decade — and allege is the right word.

The main deficit-reduction instruments would be a $1.2 trillion tax hike and deep cuts to defense spending. Neither of those proposals addresses the fundamental long-term spending drivers, which are the entitlement programs, mainly Social Security and Medicare. It is not entirely clear how that $1.2 trillion tax hike would be implemented. The tax-reform plan would lower the top marginal income-tax rate to 29 percent and repeal the alternative minimum tax (thereby forgoing some $1.7 trillion in tax revenue) — changes that are all to the good. It also protects the largest of the so-called tax expenditures, the exemptions for mortgage-interest payments, charitable giving, health-insurance premiums, and the like. But those tax expenditures would be managed “in a more cost-efficient and targeted manner,” according to Honeywell CEO David Cote, who served on the president’s fiscal commission, the work of which provided the basis for the Gang of Six tax plan. What that most likely suggests is that punitive measures are to be taken against high-earning taxpayers and businesses. Even with such measures, it will be no small thing to add $1.2 trillion in tax revenue under a program whose first steps are a $1.7 trillion tax cut and a rate reduction. And the rich won’t be the only taxpayers under the gun: More aggressive indexing of tax rates will send many Americans into higher tax brackets.

If the tax side is contradictory, the spending side is simply fuzzy — it depends on the vaguest of generalities. It calls for the government to “encourage greater economic growth” and “spend health-care dollars more efficiently.” That is government by platitude. Pleading for a stronger economy and plotting to trim federal fat hardly represents fresh thinking.

The plan, as Paul Ryan points out, employs three different budget baselines, along with a good deal of wishful thinking. For instance, it claims to achieve $641 billion in so-called mandatory savings, but the cuts listed only add up to $516 billion. The other $125 billion apparently is to be taken on good faith. Billions of dollars of “savings” in federal health-care spending are to be realized by heroically limiting spending to exactly the range in which it already is expected to stay, under Congressional Budget Office forecasts. Only in Washington does continuing to spend money exactly as planned constitute savings. Worse, it sets up procedural hurdles that will make future Social Security reform difficult. The cynical among us might note that there is no enforcement mechanism to ensure that spending cuts actually are enacted, and suspect that this is not an oversight. 

Republicans put a serious plan before the country when the House passed the Ryan budget. Democrats rejected it. President Obama’s fiscal commission put a serious plan before the country, and Democrats declared it dead on arrival because it would cut the spending that must be cut. The Democrats, it cannot be repeated often enough, did not pass a budget at all, never mind a balanced one, when they controlled both houses of Congress. They won’t pass one even now. President Obama has disavowed his own budget, which was defeated 97–0 in the Senate. And the Gang of Six plan, it should be noted, is not an actual budget, either: It’s a plan to have a plan — and a poor one at that.


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