In 2008 and 2012, President Barack Obama campaigned on ending the Bush tax cuts for the wealthiest Americans and won resounding victories both times. That policy enjoys strong public support now, just as it has since before Obama dispatched John McCain four years ago. And just last week, the nonpartisan Congressional Budget Office forecast that Obama's policy would raise $42 billion in new revenue next year and roughly $700 billion over the next decade, all with virtually no negative impact on the U.S. economy.
Nevertheless, Republican leaders in Congress are pretending their Election Day mauling never happened. Instead, the GOP's best and not brightest like Missouri Sen. Roy Blunt insist, Obama should reduce the national debt "just like Governor Romney suggested."
Echoing House Speaker John Boehner and Senate Minority Leader Mitch McConnell, Sen. Blunt told Fox News that Obama should compromise with Republicans by adopting the program of the man he just sent packing:
"I think, frankly, this is a great opportunity for the president to step forward, he's just been reelected, he doesn't have to run for office again, and come up with a plan that actually can pass. And I think that means, don't do the across the board cuts, come up with a way to have really targeted cuts and look at ways to increase revenue by one growing the economy, and two, maybe look at the tax code, just like Governor Romney suggested, you look at tax code and increase revenue without increasing taxes."And what Mitt Romney suggested at this time of the lowest total federal tax burden in 60 years and the highest income inequality in 80 was to cut the plummeting effective tax rates of the rich further still. Romney would, he claimed, offset the ocean of red ink caused by making the Bush tax cuts permanent and slashing rates by a further 20 percent just by closing some of the deductions, loopholes and credits that cost Uncle Sam over $1 trillion every year.
Of course, neither he nor his running mate Paul Ryan had the courage to publicly name a single tax break they'd end. Not one. Not ever. Not, that is, before voters made him president of the United States. And as Romney explained earlier this year, his cowardice was a feature, not a bug:
"So I haven't laid out all of the details about how we're going to deal with each deduction, so I think it's kind of interesting for the groups to try and score it, because frankly it can't be scored, because those kinds of details will have to be worked out with Congress, and we have a wide array of options."We do indeed have an array of options. But thus far, Romney, Paul Ryan and their Republican allies in Congress remain silent on which ones they recommend to the American people.
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That may be because, as the Washington Post documented, "ever-increasing tax breaks for U.S. families eclipse benefits for special interests."
The issue isn't merely that the trillion-plus dollars in annual tax expenditures is now larger than Uncle Sam's take from the income tax each year (as the Post chart above shows.) As it turns out, much of the estimated $1.3 trillion in annual tax expenditures in 2015 (a figure larger than the entire 2012 budget deficit and equivalent to about a third of the $3.8 trillion in federal spending next year) benefit working and middle income Americans. For example, the home mortgage tax deduction was worth $89 billion in 2011. Tax-deferred 401K accounts cost the Treasury $63 billion. The Earned Income Tax Credit, the measure for working Americans Ronald Reagan praised as "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress," had a similar $63 billion price tag last year.
So what deductions and loopholes are actually in the mystery meat that is the GOP's budgetary dog food? After Paul Ryan unveiled his 2012 budget (which garnered the votes of 98 percent of Congressional Republicans) which like Romney's later plan called for "lowering rates" while "broadening the base," Paul Krugman rightly mocked his secrecy on the question that mattered most:
We're talking about a lot of loophole-closing. As Howard Gleckman of the nonpartisan Tax Policy Center points out, to make his numbers work Mr. Ryan would, by 2022, have to close enough loopholes to yield an extra $700 billion in revenue every year. That's a lot of money, even in an economy as big as ours. So which specific loopholes has Mr. Ryan, who issued a 98-page manifesto on behalf of his budget, said he would close?
None. Not one. He has, however, categorically ruled out any move to close the major loophole that benefits the rich, namely the ultra-low tax rates on income from capital. (That's the loophole that lets Mitt Romney pay only 14 percent of his income in taxes, a lower tax rate than that faced by many middle-class families.)
To be sure, streamlining the labyrinthine U.S. tax would be more efficient and less confusing for the IRS and Uncle Sam alike. But as University of Michigan professor and Taxes in America co-author Joel Slemrod explained to Dylan Matthews of the Washington Post:
Can we raise enough revenue to deal with the long-term fiscal balance by only broadening or broadening and lowering rates? I think the answer to that is no. If tax rates are part of how we deal with the long-term fiscal balances, broadening isn't going to be enough. It's not nothing, but we shouldn't kid ourselves that cutting a few credits will solve this. And the cuts where the money is are very politically sensitive.Politically sensitive, indeed. Which is why Republicans determined to maintain low tax rates for the wealthy refuse to engage in an adult conversation with the American people about which tax breaks they'd limit. Instead, just days after the voters rejected Romney's bogus math, Mitch McConnell, John Boehner, Roy Blunt and their ilk are still playing the same childish game of "Name That Tax Break."