The Heritage Foundation identified approximately $260 billion is asset sales, including the partial sale of federal properties, real estate, mineral rights, electromagnetic spectrum and energy-generation facilities. Although this would be just a one-time revenue infusion, it would have lasting effects. Sales of these assets would immediately reduce the governments operating deficits, thus reducing future debt and interest costs.
Fees are a bit more complicated and the devil will be truly in the details. You can equate a fee increase to a tax hike IF the higher fee means the federal government has freed up some amount of general revenue for other purposes. Even if the fee increase were good policy, it would amount to a tax hike unless it were offset by a reduction in taxes elsewhere.
The same offsetting principle must be applied to any reduction or elimination of tax credits or loopholes. Thus far, Republicans in Congress have remained firm that any changes in the tax code must be revenue neutral. If you reduce or eliminate a credit (i.e., ethanol), the additional revenue must be offset by reducing taxes elsewhere (i.e., death tax).
Heritage Action is eager to review the details. Any deal that includes a net tax increase -- including a net tax increase disguised as a ‘user fee’ – will be unacceptable. But of course, President Obama and Congress could have avoided the skepticism by bringing in the C-SPAN cameras and conducting the negotiations before the American people.
As history has shown, promises to act in the future are also problematic. Two decades ago, President George H.W. Bush struck a deal with Congressional Democrats: $2 in spending cuts for every $1 in tax hikes. What actually happened? Taxes increased by $137 billion and spending went up by $22 billion instead of going down by $274 billion.
Most Americans understand the Washington Establishment is incapable of keeping a promise, which is why there is such broad support for a balanced budget amendment to the Constitution. It is one of the few ways the American people can effectively restrain Washington’s reckless behavior in the future.
As details emerge over the course of the week, it is important to remember that Washington’s penchant for spending created this mess. And the only way we can get our country back on the right track is to get spending under control. Gimmicks and tax increases will not get us there.