Mitch McConnell appeared on three major networks Sunday morning. But the Senate Minority Leader had just one message to deliver: Were done with tax increases.
As you probably know the bipartisan agreement on taxes that President Obama signed last week will push tax rates on some high incomes back to what they were during the Clinton era.
Republicans arent happy about that or any of the other tax increases in the new law. At least two more fiscal policy debates are about to take placeone over whether to increase the governments borrowing capacity known as the debt ceiling" and one over whether to replace or postpone a set of automatic spending cuts known as the sequester. However those debates are settled separately or together McConnell and his colleagues are making clear they believe that more tax increases should not be part of the conversation.
Weve resolved the tax issue" McConnell said on NBCs Meet the Press" echoing words hed used in a Yahoo! News op-ed several days before. Its behind us." Going forward McConnell said deficit reduction must take place through spending cuts exclusively. We dont have this problem because we tax too little. We have it because we spend way too much."
Americans have heard this argument before. But they might be more inclined to believe it now for precisely the reason that McConnell cites: Last weeks legislation raises taxes. Isnt that enough? Isnt it time to go back to spending cuts?
Hardly. For one thing last weeks agreement known as the Taxpayer Relief Act" was not the only deficit reduction legislation that Obama and the Republicans have enacted. Rather its the latest in a series of measures. Most notable among the past efforts was the 2011 Budget Control Act" which Obama signed after Republicans first threatened to hold up the debt ceiling increase. Those past measures which were all spending cuts and no tax increases reduced the deficit by $1.5 trillion. The Taxpayer Relief Act which is all tax increases and (almost) no spending cuts reduces the deficit by less than half that amount. So even taking into account last weeks agreement deficit reduction has meant more spending cuts than tax increases.
And it will continue to be so. During that same Meet the Press" interview McConnell said Obama doesnt embrace the effort to reduce spending." Thats just not true. The original proposal he made to House Speaker John Boehner shortly after the election included hundreds of billions of dollars in proposed spending reductions including cuts to discretionary spending (which is already at historic lows) and to Medicare. The Medicare cuts were all on the provider sidethat is they would have reduced what the program pays hospitals drug makers and other suppliers of care but without directly reducing benefits. But in a subsequent proposal one Boehner ultimately rejected Obama said he would even agree to a reduction in Social Security benefits. In this next round of fiscal policy making Obama has said he wants more revenue; most likely he will return to some of the ideas that didnt make it into last weeks deal. But Obama hasnt said he wants an all-taxes approach. On the contrary he has also said he wants more spending cuts too.
In other words neither partys approach to deficit reduction is truly balanced: Each side is actually leaning more heavily on spending cuts. But Obama would rely on those cuts a lot less than the Republicans would as Robert Greenstein president of the Center on Budget and Policy Priorities recently explained:
If this Republican view holds then when all of the deficit reduction efforts are tallied together spending cuts will outpace revenue increases by nearly 5 to 1. ... If future deficit reduction comes through an even split of revenues and spending cuts total spending cuts will still outpace revenue increases by nearly 2 to 1.
Of course McConnell and his allies have no problem with five dollars of spending cuts for every dollar of new taxes. Remember: During the presidential primary campaign all of the Republican candidates said theyd reject deals with even ten dollars of spending cuts for every dollar of new taxes. As far as they are concerned one dollar of new taxes is one dollar too many.
But these days Americans arent paying a lot of taxes at least by historical standards. In 2012 federal tax receipts were equal to a little less than 16 percent of gross domestic product. Thanks to last weeks legislation receipts will reach 19.4 percent in 2022 according to official projections. (Actually receipts probably wont get quite that high because that projection assumes expiration of provisions that Congress typically renews.) That will still be lower than they were in 2001 when the Bush tax cuts first went into effect. In fact as Michael Linden and Michael Ettlinger point out in a new brief from the Center for American Progress:
the last time we actually balanced the budgetfrom 1998 to 2001revenue surpassed 19.5 percent every year averaged 20 percent of GDP those four years and topped out at 20.6 percent of GDP in 2001. And that was before the Baby Boom generation began to retire.
This may not be what most Americans want to hear. But most sensible budget observers even more conservative ones determined to enact substantial budget cuts believe taxes must rise even morebecause the population is getting older and the government has quite rightly assumed so much responsibility for health and retirement benefits. The chairmen of the presidents deficit reduction commission Erskine Bowles and Alan Simpson suggested taxes should eventually reach 21 percent of gross domestic percent. (Sadly and predictably Bowles and Simpson neglected to criticize McConnell about this when they followed him on Meet the Press.) Pete Domenici and Alice Rivlin authors of a widely respected (but under-appreciated) proposal from the Bipartisan Policy Center think taxes should go higher than that. Keep in mind that by international standards Americans pay very little in taxes.
Republicans and their allies take a different view because if they had their way the government would provide a lot less than what it does now. But its not a popular view and they know it. Thats why on Meet the Press" McConnell declined to get specific about exactly how hed reduce spending. He didnt say that the discretionary spending cuts hes embraced would mean fewer food inspectors longer delays at airports or less housing assistance for poor people. And he didnt reveal that the entitlement changes hes endorsed would mean less financial protection for people on Medicare and Medicaid.
Nobody likes paying taxes but everybody likes the services that taxes finance. The Republican strategy is to make people focus on the former and ignore the latter.
Mitch McConnell appeared on three major networks Sunday morning. But the Senate Minority Leader had just one message to deliver: Were done with tax increases.
As you probably know the bipartisan agreement on taxes that President Obama signed last week will push tax rates on some high incomes back to what they were during the Clinton era.
Republicans arent happy about that or any of the other tax increases in the new law. At least two more fiscal policy debates are about to take placeone over whether to increase the governments borrowing capacity known as the debt ceiling" and one over whether to replace or postpone a set of automatic spending cuts known as the sequester. However those debates are settled separately or together McConnell and his colleagues are making clear they believe that more tax increases should not be part of the conversation.
Weve resolved the tax issue" McConnell said on NBCs Meet the Press" echoing words hed used in a Yahoo! News op-ed several days before. Its behind us." Going forward McConnell said deficit reduction must take place through spending cuts exclusively. We dont have this problem because we tax too little. We have it because we spend way too much."
Americans have heard this argument before. But they might be more inclined to believe it now for precisely the reason that McConnell cites: Last weeks legislation raises taxes. Isnt that enough? Isnt it time to go back to spending cuts?
Hardly. For one thing last weeks agreement known as the Taxpayer Relief Act" was not the only deficit reduction legislation that Obama and the Republicans have enacted. Rather its the latest in a series of measures. Most notable among the past efforts was the 2011 Budget Control Act" which Obama signed after Republicans first threatened to hold up the debt ceiling increase. Those past measures which were all spending cuts and no tax increases reduced the deficit by $1.5 trillion. The Taxpayer Relief Act which is all tax increases and (almost) no spending cuts reduces the deficit by less than half that amount. So even taking into account last weeks agreement deficit reduction has meant more spending cuts than tax increases.
And it will continue to be so. During that same Meet the Press" interview McConnell said Obama doesnt embrace the effort to reduce spending." Thats just not true. The original proposal he made to House Speaker John Boehner shortly after the election included hundreds of billions of dollars in proposed spending reductions including cuts to discretionary spending (which is already at historic lows) and to Medicare. The Medicare cuts were all on the provider sidethat is they would have reduced what the program pays hospitals drug makers and other suppliers of care but without directly reducing benefits. But in a subsequent proposal one Boehner ultimately rejected Obama said he would even agree to a reduction in Social Security benefits. In this next round of fiscal policy making Obama has said he wants more revenue; most likely he will return to some of the ideas that didnt make it into last weeks deal. But Obama hasnt said he wants an all-taxes approach. On the contrary he has also said he wants more spending cuts too.
In other words neither partys approach to deficit reduction is truly balanced: Each side is actually leaning more heavily on spending cuts. But Obama would rely on those cuts a lot less than the Republicans would as Robert Greenstein president of the Center on Budget and Policy Priorities recently explained:
If this Republican view holds then when all of the deficit reduction efforts are tallied together spending cuts will outpace revenue increases by nearly 5 to 1. ... If future deficit reduction comes through an even split of revenues and spending cuts total spending cuts will still outpace revenue increases by nearly 2 to 1.
Of course McConnell and his allies have no problem with five dollars of spending cuts for every dollar of new taxes. Remember: During the presidential primary campaign all of the Republican candidates said theyd reject deals with even ten dollars of spending cuts for every dollar of new taxes. As far as they are concerned one dollar of new taxes is one dollar too many.
But these days Americans arent paying a lot of taxes at least by historical standards. In 2012 federal tax receipts were equal to a little less than 16 percent of gross domestic product. Thanks to last weeks legislation receipts will reach 19.4 percent in 2022 according to official projections. (Actually receipts probably wont get quite that high because that projection assumes expiration of provisions that Congress typically renews.) That will still be lower than they were in 2001 when the Bush tax cuts first went into effect. In fact as Michael Linden and Michael Ettlinger point out in a new brief from the Center for American Progress:
the last time we actually balanced the budgetfrom 1998 to 2001revenue surpassed 19.5 percent every year averaged 20 percent of GDP those four years and topped out at 20.6 percent of GDP in 2001. And that was before the Baby Boom generation began to retire.
This may not be what most Americans want to hear. But most sensible budget observers even more conservative ones determined to enact substantial budget cuts believe taxes must rise even morebecause the population is getting older and the government has quite rightly assumed so much responsibility for health and retirement benefits. The chairmen of the presidents deficit reduction commission Erskine Bowles and Alan Simpson suggested taxes should eventually reach 21 percent of gross domestic percent. (Sadly and predictably Bowles and Simpson neglected to criticize McConnell about this when they followed him on Meet the Press.) Pete Domenici and Alice Rivlin authors of a widely respected (but under-appreciated) proposal from the Bipartisan Policy Center think taxes should go higher than that. Keep in mind that by international standards Americans pay very little in taxes.
Republicans and their allies take a different view because if they had their way the government would provide a lot less than what it does now. But its not a popular view and they know it. Thats why on Meet the Press" McConnell declined to get specific about exactly how hed reduce spending. He didnt say that the discretionary spending cuts hes embraced would mean fewer food inspectors longer delays at airports or less housing assistance for poor people. And he didnt reveal that the entitlement changes hes endorsed would mean less financial protection for people on Medicare and Medicaid.
Nobody likes paying taxes but everybody likes the services that taxes finance. The Republican strategy is to make people focus on the former and ignore the latter.
