Ken Connor

Democrats blame the recent Super Committee's deficit reduction failure on Republican obstinacy and obstructionism. It was the GOP's refusal to raise taxes on the super rich, the Dems maintain, that resulted in the committee's inability to reach a compromise. Charles Krauthammer does an excellent job of debunking this fallacy in a recent Washington Postop-ed in which he illustrates the critical difference between Republican proposals that would have increased tax revenues and the Democrats' dogged obsession with raising tax rates:

In deficit reduction, all that matters is tax revenue. . . . The Republican proposals raise revenue, despite lowering rates, by opening a gusher of new income for the Treasury in the form of loophole elimination. . . . Raising revenue through tax reform is better than simply raising rates, which Democrats insist upon with near religious fervor. It is more economically efficient because it eliminates credits, carve-outs and deductions that grossly misallocate capital. And it is more fair because it is the rich who can afford not only the sharp lawyers and accountants who exploit loopholes but the lobbyists who create them in the first place. . . . Yet the Democrats, who flatter themselves as the party of fairness, are instead obsessed with raising tax rates on the rich as a sign of civic virtue.

Krauthammer's piece details several Republican or bipartisan proposals that would have increased tax revenues while simultaneously cutting tax rates, contrasting this approach with the ineffectiveness of simply raising rates on the super rich while leaving the vast network of loopholes and exemptions untouched. Such a tactic yields marginal results at best, with revenue increases nowhere near the levels they would be if the loopholes were eliminated. So why the preference for rhetorical fluff over substantive solutions? Quite simply, because Democrats have a vested interest in maintaining the status quo. They cannot afford the political price associated with backing reforms that would alienate their core constituencies. Pinning the stalled deficit reduction efforts on the GOP serves as a convenient red herring, distracting from President Obama's woeful lack of leadership on this issue. Krauthammer explains:

Has the president ever publicly proposed a single significant structural change in any entitlement? After Simpson-Bowles reported? No. In his February budget? No. In his April 13 budget "framework"? No. During the debt-ceiling crisis? No. During or after the supercommittee deliberations? No.

[It] is the Republicans who passed – through the House, the only branch of government they control – a real budget that cut $5.8 trillion of spending over the next 10 years. Obama's February budget, which would have increased spending, was laughed out of the Senate, voted down 97 to 0. As for the Democratic Senate, it has submitted no budget at all for 2 1/2 years.

In trademark Washington fashion, demagoguery and cheap talk are winning out over substantive action. Both parties are equally guilty of playing this game when it suits their purposes, fiddling away while Rome burns. At the risk of sounding like a broken record, however, time is running out. The current crises plaguing the Eurozone could be our Cassandra; if we don't enact bold reforms, and now, ours may very likely be the next default on the horizon.

No amount of spin, or rhetoric, or blame-gaming can change the mathematical facts on the ground: Our debt has spiraled out of control and we are rapidly reaching a point of no return. This Congress and this President have had more than enough time to act, but they have failed to do so. If their dismal approval ratings are any indication, there will be a price to pay for this inexcusable indolence come November 2012.


Ken Connor

Ken Connor is Chairman of the Center for a Just Society in Washington, DC.