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Congressional Supercommittee Is Super Divided

The opinions expressed by columnists are their own and do not necessarily represent the views of

Sen. Pat Toomey, the GOP's fiercest anti-tax warrior, stunned the supercommittee when he proposed raising taxes to break the impasse over cutting the government's monster debt.    


The freshman Pennsylvania Republican has impeccable conservative credentials. Before he ran for the Senate last year, he ran the Club for Growth, an anti-tax, pro business political action committee that supported GOP House and Senate candidates who fought tax hikes, even knocking off some pro-tax Republican incumbents in party primaries.   

Toomey's move was denounced by the Democrats who refused play his game, saying his plan didn't do enough to raise revenues. It also opened up a deeply divisive split in his own party.

Rep. Jeb Hensarling of Texas, the Republican co-chair of the supercommittee, has sided with Toomey, as have other Republicans, including party leaders. But dozens of members see his plan as a betrayal of the GOP's position against raising taxes at any time, especially in the middle of a weak, high unemployment economy.   

Rep. Patrick T. McHenry of North Carolina, who calls Hensarling one of his mentors, gathered more than 70 signatures from House Republicans this week on a fire-breathing letter to the panel's leadership that called any tax increases "irresponsible and dangerous to the health of the United States."     

But the headlines and the stories about Toomey's tax plan leave out a critical component. While it would cap a number of itemized deductions that taxpayers take, thus raising their taxes, it would also offset those increases by lowering the income tax rates across the board.  


Under Toomey's plan, all of the income tax rates would be reduced by as much as 20 percent -- lowering the top rate from 35 percent to 28 percent. The 10 percent bottom tax rate, created under President George W. Bush's 2001 tax cut law, would drop to 8 percent.

The details of these deduction caps are not clear right now and, as a chief analyst of a major business lobbying group told me this week, "the devil is in the details."

Overall, Toomey's plan would reportedly raise $400 billion in additional tax revenue, though an estimated $110 billion of that would be derived from higher economic growth and increased employment.

Supercommittee Democrats argue that his plan would hand huge tax cuts to the wealthy. But GOP aides say that most people in higher income brackets usually take many more deductions to lower their taxable income, so they would on average see their taxes go up.

 President Obama and the Democrats are fixated on raising taxes on people who make more than $200,000, as well as small businesses who file as individual taxpayers, major corporations, and investors by raising their capital gains tax rate.

But these taxpayers pay the lion's share of all income taxes. Raise taxes on capital gains and you will get less venture capital investment and a weaker economy. Fewer Americans will sell assets they hold to plow their gains into higher performing, growth investments if the capgains tax rates take a bigger bite out of their profits.


Without knowing the full details of Toomey's plan, he is following a tried and true fiscal path to economic growth. We've had many recessions and downturns in the last five decades, and lowering the tax rates have always helped our economy recover and made it stronger than before.

The Kennedy across-the-board tax rates in the 1960s. The Reagan tax cuts in the 1980s, followed by the broader and bipartisan tax reforms of 1986 that got rid of a number of tax breaks, exemptions and other loopholes in order to lower the rates, cutting the top marginal rate to 28 percent as Toomey would do now.

And let's not forget the Republicans' pro-growth capital gains tax cut President Clinton signed in his second term that unleashed a wave of high tech capital investment that led to full employment and a budget surplus.

Even the Bush tax cuts in in 2001 and 2003 helped us get through several financial catastrophes, cut the deficit in half and produced a 4.7 percent unemployment rate in 2007 just before the subprime, home foreclosure scandal drove us into severe recession.

Still, it is hard to see this bitterly divided supercommittee producing a well thought out growth incentive plan under such a tight deadline, before Thanksgiving.

The driving force behind its creation in the federal debt limit battle was a series of annual budget deficits under Barack Obama's presidency that climbed to $1.5 trillion in his first year and hit $1.3 trillion this year. The total federal debt now stands at a whopping $15 trillion.


But the members of the supercommittee say they are no nearer to a deal now than when they began. They have agreed on a large number of spending cuts, but clearly the stumbling block remains the issue of taxes. Maybe the best course would be to set that issue aside for the time being, turning it over to the tax-writing panels of Congress, and concentrate on a plan to cut spending.

The supercommittee's mission is to cut at least $1.2 trillion over 10 years. That comes out to a little over $100 billion a year out of a nearly $4 trillion annual budget that wastes more than that sum each and every year.

If they can't agree on even that amount in savings, then I say, let the automatic budget cuts -- triggered under the debt limit deal -- begin.

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