Raising revenue without raising taxes

Raising revenue without raising taxes

by digby

Yesterday I wrote about an interview between Jessica Yellin and Saxby Chamblis and Mark Warner that featured this exchange:

Yellin: Senator Chamblis do you believe that Senate Republicans will agree to a package that includes any sort of tax changes?

Chambliss: Well, the fact of the matter is that you can't solve this debt problem just with reductions in discretionary spending. You can't solve it just by attacking and reforming entitlements. You've got to look at the revenue side also.

What we are looking at proposing is actually a reduction in corporate rates and personal individual income tax rates, which will put more money in people's pockets and we're going to do that with the reduction in tax expenditures. Every time we've done that in years past whether it was under President Reagan or president Bush we have seen revenues increase. And we've got to have an increase in revenues if we are going to retire this debt... revenues have to be on the table if we're serious about attacking that debt.

Yellin:Senator Warner, that's a big concession by Republicans.
As I noted yesterday that's flim flam. "Tax expenditures" means closing corporate loopholes (which will send their armies of lobbyists, lawyers and accountants on the prowl for new ones) and deductions (Like the one for mortgage interest.) Lowering rates for corporations and individuals means --- lowering tax rates. Chambliss evokes Reagan and Bush because he's parroting stale supply side nonsense about lowering rates automatically raising revenue.

Gang member Kent Conrad was a bit more explicit on This Week a while back:

"Fundamentally, if we're going to raise revenue, I don't think the way to do it is to raise rates. I think the way to do it is to eliminate some of the loopholes that exist in the system," the senator said.

So yes, they all agree that they need to raise "revenue"just not "taxes." And CNN believes that's a big GOP concession that requires the Democrats to "meet halfway" and cut entitlements. (I think we should call this the "corporate tax lawyers full employment act.")

In fact, CNN is so enamored of their hard hitting interview with Chambliss yesterday that they just replayed it. Only it was a little bit shorter. Here's what they quoted Chambliss saying:

Chambliss: Well, the fact of the matter is that you can't solve this debt problem just with reductions in discretionary spending. You can't solve it just by attacking and reforming entitlements. You've got to look at the revenue side also.

Now it's possible that cutting these "tax expenditures" really will bring in some money. But let's just say that the idea that this means they can lower tax rates while insisting on harsh cuts in "entitlements" makes no sense at all. Either we are raising revenue or we are not raising revenue. But I'm fairly sure that old Saxby reaching back to Reagan and Bush (Jr or Sr, it doesn't matter) gives away the game. They left huge deficits behind which subsequent Democratic presidents had tied around their necks like a flaming tire. Indeed, for the past 30 years the defining feature of our economics has been Republicans insisting on huge tax cuts which they insist will pay for themselves, running up massive deficits and then demagogueing the hell out of them when a Democrat takes over. And so, here we are.

I do not believe that any "deficit reduction plan" agreed upon under these circumstances will ever do anything but fill the coffers of the wealthy by stealing from the poor. That's how this con is played. In this case it's especially cunning --- the people will blame the Democrats for their lousy financial prospects and attribute it to an unwillingness to cut even more. That's the Republican version of winning the future.

Oh, and for an added bonus, unless the Dems absolutely shut the door on any cuts to Medicare, I think we can be sure to see more ads like this next year:

At the very least putting Medicare on the menu after the Ryan Plan nearly decimates it destroys any chance the Dems had to turn that back on them.

Update: And honestly, what's the point of this? Wouldn't it have been better to have the House release a plan to the left of Simpson-Bowles, if only to have a tiny bit of leverage with the GOP? Suzy Khimm reports for Mojo
President Barack Obama's recent moves to counter Republicans on the thorny issue of debt and deficit reduction have forced his Democratic allies to rapidly reposition themselves.

The first surprise came over the weekend, when many congressional Democrats first learned of the president's plans to wade into the deficit debate with a major speech this Wednesday. Then, on Tuesday morning, the Washington Post reported that Obama plans to endorse the controversial recommendations of Alan Simpson and Erskine Bowles, the co-chairs of his deficit reduction commission. Many Democrats had criticized those same recommendations when they were released late last year. So now Obama's allies on and off the Hill are scrambling to pull off a tricky balancing act: supporting their president while holding the less appealing aspects of Bowles-Simpson at arm's length.

The need for Dems to alter their rhetoric in response to Obama's moves was on full display Tuesday morning at the Center for American Progress, where Democratic activists and members of Congress gathered for a speech by Rep. Chris Van Hollen (D-Md.). Van Hollen made it clear that Bowles-Simpson would become the new standard-bearer for the Democratic Party, saying that it launched "a really important dialogue" and took "an overall balanced approach" to deficit reduction.

John Podesta, the head of the Center for American Progress and the chair of Obama's transition team, also had kind words for the plan. "I agree with Congressman Van Hollen that Bowles-Simpson is a good starting place for the discussion," he told Mother Jones in an interview. But Podesta hasn't always been so eager to embrace the Bowles-Simpson proposals. Last December, Podesta called the plan "substantively flawed" as well as "fundamentally unbalanced and unrealistic." The proposal's discretionary spending cuts would "harm our nation's long-term economic competitiveness and violate an array of social compacts that underpin the common good of our country," he wrote.
I guess they just feel the need to support the President, but it can be very useful to have an angry faction out there when you are negotiating. Just ask John Boehner.