A bi-partisan Senate working group which includes Republican Senators Tom Coburn (Oklahoma), Mike Crapo (Idaho), and Saxby Chambliss (Georgia) is considering back door, automatically triggered tax increases as a way to bring down the budget deficit.
The Wall Street Journal reports that the plan which is under consideration would provide for “tax reform” that would generate $180 billion over ten years. “Tax reform” is the new word for tax hikes just as “investment” is the new word for more spending. While the Senators are understandably vague about what tax increases they are contemplating, they reportedly want to eliminate various tax deductions and “loopholes.” If the work of the Bowles-Simpson deficit reduction commission (on which Coburn and Crapo sat) is any guide, the loopholes would include reducing or eliminating the mortgage interest, charitable contribution, and state and local tax deductions.
More insidious, the tax proposal has a gimmick: If Congress doesn’t raise taxes by the required amount, the law would automatically trigger a cut in all tax deductions equal to the outstanding revenue shortfall. A tax increase by Immaculate Conception. Automatic. No Senatorial fingerprints on it. In other words: taxation without representation.
The Senate group is headed by Senate Budget Committee Chairman Kent Conrad (D-ND). Realizing his big taxing and big spending ways would lead to defeat in the 2012 election, he has decided to retire but not before he sticks it to us one more time with tax increases. Also involved is Illinois Democratic Senator Dick Durbin who says of their work “we’re getting close,” hoping to have his plan for tax hikes ready “in a matter of weeks or months.”
Of course, the bait for the tax hikes are a variety of spending cuts included in the plan, but the Republican Senators’ participation in these talks and their possible support for the tax increases that will eventuate, will just serve to legitimize a tax increase.
What are Coburn, Crapo, and Chambliss thinking? I asked Mike Crapo during a recent visit to Idaho. He swears that he will oppose any tax increase, but his participation in these talks leads one to suspect that he might not do so.
The concept of splitting the difference in a grand deal of tax increases in return for spending cuts would lock into place much of the enormous increase in government spending that has taken place under Obama.
As we note in our new book (due out March 1) Revolt!, the proportion of the American GDP that is spent by all governments (state, local, and federal combined) has risen from 35% before Obama to 44% now. The federal share alone has zoomed from 18% to 25%. In two years!!! Anyone who backs tax increases is protecting much of this spending growth.
Reducing the deficit is important. Cutting back government spending is infinitely more so. At stake over the deficit is our economic viability. But if we don’t cut back government spending, we will become – by definition – a socialist state.
That such fiscal conservatives as Coburn, Crapo, and Chambliss would lend their reputations to these back-door tax increases is an outrage. They may hope to conceal the tax hikes behind a facade of reduced tax rates. But the mandate to raise almost $200 billion of new tax revenues is very clear – it’s a tax increase.
The Senate plan also plans cuts in Social Security and Medicare over the longer term. But the Democrats who are leading the effort have three goals:
(a) Blunt this year’s House Republican budget cuts by getting some Republicans to support a more modest alternative.
(b) Ensnare the Republican Senators in an effort to cut Social Security and Medicare (which Obama can later disavow and run against).
(c) Get Republican support for tax increases.
Senators Coburn, Crapo, and Chambliss may feel that they can lie down with dogs and not get fleas. But they are wrong. They are letting themselves be used to undermine the Republican no-tax agenda and should leave these working sessions immediately.
And, if they don’t, the good citizens of Oklahoma, Idaho, and Georgia should make them do it!