Democrats: Hey, Let's "Cut Spending" By Raising Taxes

Posted: Mar 06, 2013 3:07 PM

From the party that brought you "deficit reduction" legislation that would have increased the deficit by billions comes a very special lexical reimagination of the term "cutting spending."  Roll Call reports:

Senate Democrats on Tuesday argued that lawmakers could increase tax revenues by eliminating tax breaks that resemble spending programs, but Republicans are not buying into Democratic efforts to frame their case in those terms. At a Senate Budget Committee hearing, Democrats and Republicans agreed that the basic function of the tax code should be to raise revenue rather than reward interest groups and subsidize certain types of businesses and activities. But they remain divided on the basic question of whether the government needs to collect more revenue or just raise the same amount of money more efficiently. Tuesday’s hearing was arranged by Senate Budget Chairman Patty Murray, D-Wash., who is in the midst of writing a fiscal 2014 budget resolution that will serve as a counterpoint to the budget resolution being prepared by the Republican House Budget Chairman Paul D. Ryan of Wisconsin. Murray offered something of a preview of her budget blueprint in her opening statement.

“There’s no question that we need to look at government programs carefully, so that we can make fair, responsible cuts that put our families and our economy first,” she said. “But a big source of spending, and one that deserves to be just as closely examined, is expenditures in our tax code.” ... In response, Sen. Jeff Sessions, R-Ala., argued that new revenue from curbing tax breaks should be used for “reducing rates and simplifying the tax code” rather than supporting government spending. Despite their staunch resistance to any net tax increase, many congressional Republicans appear willing to move aggressively to broaden the tax base in an effort to streamline the tax system and lower tax rates as much as possible.

Simplifying the tax code and broadening the tax base are worthy, pro-growth goals. Republicans have proposed similar reforms as a means to enhance revenues without hiking tax rates.  Indeed, Democrats have recently rejected exactly this sort of plan on multiple occasions, both during Super Committee deliberations, and throughout 'fiscal cliff' negotiations.  They were hell-bent on raising tax rates on "the rich," and they got their way by exposing the middle class to huge tax increases as leverage.  Now that they've gotten a taste of more dollars flowing into federal coffers, Democrats want to continue to feed the beast -- so they've reverted back to embracing Republicans' previous compromise position as a supplementary source of more tax dollars.  So what Patty Murray and Senate Democrats are preparing to propose isn't new on the merits.  It's not even new to call certain tax breaks and loopholes "spending in the tax code."  What is new, to my knowledge, is Democrats' attempt to recast these revenue increasing tax changes as "spending cuts."  They're not, unless you consider allowing people and entities to keep more of their money "government spending" because Uncle Sam could be confiscating more of it.  As Jeff Sessions says in the story quoted above, the only context in which the GOP has been willing to implement a  loopholes/deductions reduction plan is in conjunction with a larger pro-growth reform package that reduces (or at least does not increase) rates.  This tracks with the recommendations of the president's fiscal commission, with whom Obama only met once, and whose plans he ignored.  Sources at the Senate Budget Committee tell me that they're bracing for a multi-trillion-dollar tax increase embedded in the Democrats' first budget in four years.  The holiday from governance is over, and this is what they're already cooking up, based on a memo from Sen. Murray:

Based on what Murray writes in this January memo to her Democratic colleagues, it appears entirely possible that Murray’s budget will propose a $2 trillion (or more) tax hike. As Murray argues, the savings from slowing the increase in spending that are already in law (mainly from the Budget Control Act that was passed over a year ago) as something that needs to be ‘balanced’ by ‘cutting’ tax ‘expenditures’ (ie by raising taxes), then this would appear to be where she and Senate Democrats are headed.

So spending reductions already on the books must be "balanced" with more taxes.  Fabulous.  Murray goes on to write that her party will use Simpson-Bowles as a model for imposing a 1:1 ratio of spending cuts to revenue increases.  But Simpson-Bowles actually recommended a 3:1 ratio, and their updated plan calls for an even heavier emphasis on cuts.  Democrats want to shave that ratio down to 50/50, and pretend that effective tax increases are somehow spending cuts.  None of this is about solving the debt crisis, mind you -- it's about satisfying the government's voracious and ever-growing appetite for spending.  

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