Must-Read: I concur with Jonathan Chait here: “Fix the Debt” has lost its way, and does not look like it will ever be able to find it again. People funding it and working for it should be well advised to go and find something else more productive to do with their money and time…
Why ‘Fix the Debt’ Just Can’t Quit Paul Ryan: “Last week, House Republicans released a plan for a gigantic, regressive tax cut…
:…Since gigantic tax cuts increase the budget deficit, you would think an organization devoted to the singular mission of reducing the deficit would oppose it. But no. The anti-deficit lobby Fix the Debt released a statement of qualified praise, which I ridiculed. Fix the Debt responds with a new, brief defense of its position. What its argument actually reveals is its denial about the state of the Republican Party. Here is the relevant portion of Fix the Debt’s response:
We don’t endorse the plan, but we do welcome it because it puts tax reform on the agenda in Washington. It also moves in the right direction by eliminating or limiting many of the tax breaks that complicate the tax code and shrink the tax base. Tax reform should contribute to deficit reduction, and definitely not increase deficits. We hope that the new plan will spur discussion and bipartisan negotiation on reform that will simplify the tax code, make the country more competitive, and help to fix the debt.
The nub of the argument is that the Republican plan, while admittedly imperfect, ‘moves in the right direction.’ But if you define the right direction as reducing the debt, then the plan doesn’t move in the right direction. It moves in the wrong direction. The Republican plan is for massive cuts in tax rates, including the complete elimination of the estate tax. It is true that the proposal gestures vaguely in the direction of closing loopholes and expenditures, but it does not define what these would be. What’s more, the plan’s authors have made clear that the proposal will be a net tax cut.
So how can Fix the Debt claim that a plan to increase the debt can ‘help to fix the debt’? It can only be understood as an extension of the organization’s dysfunctional enabling relationship…. During President Obama’s first term, anti-deficit activists came up with a plan that they hoped would induce Republicans to abandon their fanatical opposition to higher tax revenue. First, they would get Democrats to support cuts to Social Security and Medicare as part of the trade. And second, the higher revenue would come not in the form of tax-rate increases but instead by reducing loopholes and [tax] expenditures…. In reality, Republicans refused to go for this deal. They didn’t just refuse once. They refused time after time. In 2010, the Simpson-Bowles commission came up with a plan that traded revenue-increasing tax reform for cuts to retirement programs, and leading Republicans like Paul Ryan all rejected the deal. Then, in 2011, Obama tried to strike a similar bargain with House Republicans when they held the debt ceiling hostage, but they rejected it again. That standoff led to the creation of a ‘supercommittee’ that was tasked with creating another version of the revenue-increasing tax-reform-for-retirement-cuts deal, which predictably failed again. And then, when the Bush tax cuts were set to expire at the end of 2012, the Obama administration hoped the pressure of an imminent tax increase would force Republicans to make some version of the deal, but once again they refused, instead using their leverage to minimize the tax hit on upper-income households…. The debt-hawk theory on how Republicans could be induced to give up their fanatical opposition to higher revenue failed….
Conceding that this is the Republican position would subvert Fix the Debt’s entire theory of change. So instead the group continues to reside in a fantasy world where the GOP can be coaxed into doing the thing it has proven extensively it won’t do. In this fantasy world, a Republican using the words ‘tax reform’ means a step toward ‘discussion’ and ‘bipartisan negotiation’ and, ultimately, a result that would be the precise opposite of what Republicans actually want to do.