On Fox News Sunday, Sen. Pat Toomey (R., Pa.) discussed the impending deadline for the congressional “supercommittee” charged with striking a deal to reduce the deficit and avoid automatic sequestrations. Host Chris Wallace challenged Toomey on his plan, which would match $700 billion in spending cuts with $500 billion in revenues, mainly in the form of deduction limits for higher earners. Toomey defended his “break” from Republican pledges not to raise taxes.
Question: why are you breaking with the GOP pledge not to raise taxes in the middle of a bad economy and how many Republicans will go along with you.
TOOMEY: Well, let me — first of all, let me say, if I were king, this is not the plan I’d put on the table. But if we both went into our respective corners and had no flexibility at all, then we wouldn’t get anything accomplish. Number two, the plan that I put on the table is contingent upon pro-growth tax reform.
Every group that’s looked to this, all of the bipartisan commissions, gang of six and the others, have acknowledge that if there is more revenue it has to come in the context of pro-growth tax reform, the kind of reform we’re talking about absolutely guaranteed to create millions of jobs over time and still more revenue.
And, finally, Chris, the other reason to make a tough decision like this, is in the alternative, we are 13 months away from the biggest tax increase in American history. And that’s written into law. That’s going to happen.
WALLACE: You’re talking about the Bush tax cuts expire.
TOOMEY: That’s exactly right.
And so, what we’ve suggested is, as an alternative to an economy destroying tax increase right around the corner, let’s have a reform, let’s simplify the code, let’s lower rates, let’s wipe out some of the loop holes and special interest, favors and deductions. Let’s have the economic growth that would come with that.
And as we lower the rates and contract the value of deductions, we’ll only generate a little revenue so that we can reduce the deficit.
WALLACE: Now, I don’t want to get too far on the weeds, but Democrats immediately rejected your plan because they say that the money that would be lost by lowering those tax rates, basically 20 percent below the Bush tax cuts, would cost over $3 trillion for the economy, and they say the money you’re going to will lose that will increase the deficit is more than money you’ll get from closing these tax loops. That it’s a net loser.
TOOMEY: First of all, that’s not true. You could design this in a way — and as I said, I didn’t invent this. We didn’t invent this. This is an idea that’s been suggested by the Simpson-Bowles commission, by the Rivlin-Domenici.
Now, it’s true that they want to raise taxes more. I think that as you reduce the value of these deductions, if you go too far, you try to create too much revenue, you can do economic damage. But you absolutely can do this in a way that will be pro-growth, that will generate more revenue, that would avoid this huge tax increase that’s otherwise coming and I think that’s a direction we should move in.