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With a $1.5 trillion deficit and a $14 trillion debt — nearly all of which is the result of GOP policies — Republicans believe it’s time to focus almost exclusively at addressing the budget shortfalls. Arithmetic tells us there are two ways to achieve the goal: the government can bring in more money and put out less. Most Dems, like most Americans in general, prefer to do some of both.
The Republican line isn’t as flexible. They’re desperate to deal with fiscal issues — at least they claim to be — but are equally desperate to make sure the government doesn’t bring in another penny of additional revenue from anyone at any time.
As recently as the Reagan/Bush era, the parties understood that a combination of cuts and tax increases were necessary when the deficit got really big, and the parties would fight over the ratio. That was before the radicalization of the GOP.
For all of Sen. Tom Coburn’s (R-Okla.) bizarre antics, it’s good to see him push back against his own party’s line.
“The fact is we’re at the lowest tax rate this country’s been in a hundred years,” Coburn said in an interview on ABC’s Subway Series with Jonathan Karl. “And nobody believes that we’re going to get a bipartisan agreement without some way to increase revenue for the federal government. We’re also at the lowest level in a long time in terms of revenues coming in.”
Increasing tax revenues, Coburn said, does not mean increasing tax rates. Higher revenues could be accomplished by closing tax loopholes for individuals and/or corporations.
As a policy matter, this is usually where the trouble starts. Those GOP officials who are sure they can just close tax loopholes and bring in bundles of money generally struggle to explain exactly which tax loopholes they’re talking about. (What’s more, for many on the far-right, closing tax loopholes counts as a tax increase, and is therefore considered an ungodly abuse on all that is good and holy.)
But putting that aside, at least Coburn is willing to accept the basic and obvious premise — additional revenue is a necessary element of a fiscally-responsible policy.
It’s hard to overstate how much his party disagrees.
Republicans have latched on to a very good talking point, and it’s been all over the place in the run-up to Tax Day. On April 14, when asked why Republicans wouldn’t consider tax increases as a way to reduce the deficit, Speaker of the House John Boehner explained: “Washington does not have a revenue problem. Washington has a spending problem.” That same day, Majority Leader Eric Cantor got the same question. “The fact [that] I think most Americans get, Washington does not have a revenue problem. It’s got a spending problem.” Also on the same day, speaking to an annual event put on by Grover Norquist’s Americans for Tax Reform, Orrin Hatch completed the loop. “We don’t have a revenue problem,” said Hatch. “We all know we have a spending problem.”
They’re wrong. It’s nice of Coburn to notice.
Postscript: By the way, in the ABC interview, Jonathan Karl appears to have asked Coburn exactly zero questions about his role in the Ensign sex/corruption scandal. Why so much of the media appears willing to give Coburn a pass on this remains unclear.
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c u n d gulag on May 20, 2011 12:44 PM:
'So, you see kids, it's not that Daddy doesn't need to bring home more money, it's that your Ho-bitch of a Mommy spends too much of it!'
And it's simple - Coburn gets a pass because he's religious, and IOKIYAR!
ComradeAnon on May 20, 2011 12:45 PM:
Steve, there is no way in Hell that Coburn will agree to a penny increase in taxes or loophole closures for business. He is not saying anything different than any of the other republicans. I'm not sure of his exact words but he was paraphrased as individuals and/OR corporations. OR. OR.
Michael on May 20, 2011 12:46 PM:
"...Jonathan Karl appears to have Coburn exactly zero questions about his role in the Ensign sex/corruption scandal. Why so much of the media appears willing to give Coburn a pass on this remains unclear."
Ensign...Republican. Coburn...Republican. Media...not interested.
DAY on May 20, 2011 12:50 PM:
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it"
The baton has been seamlessly passed from Goebbels to the GOP.
withay on May 20, 2011 12:57 PM:
Republicans say that it is not a revenue problem but a spending problem. I say that we have a Republican problem. They ARE the problem.
berttheclock on May 20, 2011 1:01 PM:
No. Grover Norquist IS the problem. He has been, rightfully, called the Most Powerful Unelected Official in DC and in many state legislatures.
rea on May 20, 2011 1:06 PM:
These people don't give a shit about deficits, as the last 30 years amply prove. What they are trying to do is drown the shrunken federal government in the bathtub.
marty on May 20, 2011 1:07 PM:
"Higher revenues could be accomplished by closing tax loopholes for individuals and/or corporations."
Has this ever ACTUALLY happened?
Seems to me that as soon as these loopholes begin to be discussed, the lobbyists start jockeying to see how quickly they can water them down (at least) or eliminate them entirely.
I hold out no hope that it will be any different this time.
MsJoanne on May 20, 2011 1:08 PM:
Why is the media giving Coburn a pass? Because he's A FUCKING REPUBLICAN.
Captcha SUX.
Chris on May 20, 2011 1:10 PM:
"Why so much of the media appears willing to give Coburn a pass on this remains unclear."
It's clear to me. Coburn gets a pass from the media for the same reason that Ensign got a pass for so long...they're Republicans.
bobbo on May 20, 2011 1:18 PM:
Wonder if Coburn shared any of his knowledge about the need for more revenue with his former Gang of Six. Or did he just keep it a secret until he quit?
Tom Allen on May 20, 2011 1:53 PM:
You know what else would bring in more tax revenues? More employment.
So...anybody in this article focused on lowering unemployment? No? Odd, isn't it?
Rugosa on May 20, 2011 2:26 PM:
The only loophole that seems to attract any favorable attention is the home-mortgage deduction. You know, a loophole that helps moderate-income people own their own homes. I suppose the standard deduction is next, because that will capture revenue from people who can't afford home ownership. Heaven forfend that we increase taxes the wealthy!
Is it my imagination, or do the capture letters get harder and harder to read every time one comments?
Robert Waldmann on May 20, 2011 3:07 PM:
This is arithmetic "Arithmetic tells us there are two ways to achieve the goal: the government can bring in more money and put out less."
This isn't "a combination of cuts and tax increases were necessary when the deficit got really big"
Revenue doesn't come from taxes only. Consider the TARP big bank bailout. The Treasury turned a profit. The debt is less than it would have been without that program, but it wasn't a spending cut or a tax increase. Or how about the Carter Chrystler bailout (not the Obama Chrystler bailout). Ditto.
Sometimes the US Federal government buys risky assets. It doesn't do this for the high returns, it does this to prevent bankruptcies. This is not a promising time to invest, obvoiusly the Federal Government only invests when no private agent is willing to invest. But it still often makes money (for those keeping score at home Fannie and Freddie and mabye GM are predicted to be the only exceptions and all of my predictions about how the official predictions are pessimistic have been confirmed so far).
I think that the Federal Government can handle it's financial problem by issuing more bonds and investing the proceeds in riskier assets. Contrast the Social Security Administration with state meployee pension funds. The SSA faces an actuarial shortfall (not huge compared to its revenues and maybe just the result of pessimistic forecasts). So do some state pension funds. But wait no state pension fund has the same sort of huge year by year surpluses the SSA has had (even proportionally). They say they are solvent, because they claim they will get higher yields on their portfolios than they would if they had to invest only in Treasuries. The SSA would be solvent and then many trillions to spare if it were allowed to invest the way all other entities with trust funds invest. Why not ?
Now I have praised TARP and proposed more fancy federal financial transactions. This is not because I have any sympathy for the financial services industry. I think it should shrink. I think this would be an additional benefit from my approach. The high returns on financial assets reward the people who play the market compared to their more small c conservative friends and neighbors. This happens even if they tend to buy high and sell low (betting against more sophisticated investors). So they keep at it. This is what creates the huge profits in finance. Reduce those unreasonable risk premia and you reduce those huge profits.
Yes the Fed Gov would bear aggregate risk. If the economy tanked a lot of the nation's losses would be in the form of a larger national debt (which people usually barely notice hence the need for this post) not lower personal wealth of individuals or lower book equity of firms. Oh yes, my plan to eliminate the debt without tax increases or spending cuts will also work as an automatic stabilizer causing higher aggregate demand in recessions and lower aggregate demand in booms (when consumption crowds out investment).
So I claim I have a simple proposal to eliminate the national debt and reduce the magnitude of the business cycle and reduce the obscene profits of financiers.
I am not joking.
Toon Moene on May 20, 2011 3:10 PM:
Note that "increase of revenue" is about taxes - but it has two parts as well:
1. Increase tax rates. This is understandably unpopular -
although certainly not as much as Republicans imply.
2. Increase economic activity over which taxes are paid.
This is the cornerstone of Keynesian economics: The reason
it is useful for the government to spend stimulus money in
a flailing economy is that bringing back that economy up to
speed again will pay for itself in increased tax
revenue.
Of course, this assumes you believe in Keynesian economics (just like gravity and evolution).
Robert Waldmann on May 20, 2011 3:11 PM:
This is arithmetic "Arithmetic tells us there are two ways to achieve the goal: the government can bring in more money and put out less."
This isn't "a combination of cuts and tax increases were necessary when the deficit got really big"
Revenue doesn't come from taxes only. Consider the TARP big bank bailout. The Treasury turned a profit. The debt is less than it would have been without that program, but it wasn't a spending cut or a tax increase. Or how about the Carter Chrystler bailout (not the Obama Chrystler bailout). Ditto.
Sometimes the US Federal government buys risky assets. It doesn't do this for the high returns, it does this to prevent bankruptcies. This is not a promising time to invest, obvoiusly the Federal Government only invests when no private agent is willing to invest. But it still often makes money (for those keeping score at home Fannie and Freddie and mabye GM are predicted to be the only exceptions and all of my predictions about how the official predictions are pessimistic have been confirmed so far).
I think that the Federal Government can handle it's financial problem by issuing more bonds and investing the proceeds in riskier assets. Contrast the Social Security Administration with state meployee pension funds. The SSA faces an actuarial shortfall (not huge compared to its revenues and maybe just the result of pessimistic forecasts). So do some state pension funds. But wait no state pension fund has the same sort of huge year by year surpluses the SSA has had (even proportionally). They say they are solvent, because they claim they will get higher yields on their portfolios than they would if they had to invest only in Treasuries. The SSA would be solvent and then many trillions to spare if it were allowed to invest the way all other entities with trust funds invest. Why not ?
Now I have praised TARP and proposed more fancy federal financial transactions. This is not because I have any sympathy for the financial services industry. I think it should shrink. I think this would be an additional benefit from my approach. The high returns on financial assets reward the people who play the market compared to their more small c conservative friends and neighbors. This happens even if they tend to buy high and sell low (betting against more sophisticated investors). So they keep at it. This is what creates the huge profits in finance. Reduce those unreasonable risk premia and you reduce those huge profits.
Yes the Fed Gov would bear aggregate risk. If the economy tanked a lot of the nation's losses would be in the form of a larger national debt (which people usually barely notice hence the need for this post) not lower personal wealth of individuals or lower book equity of firms. Oh yes, my plan to eliminate the debt without tax increases or spending cuts will also work as an automatic stabilizer causing higher aggregate demand in recessions and lower aggregate demand in booms (when consumption crowds out investment).
So I claim I have a simple proposal to eliminate the national debt and reduce the magnitude of the business cycle and reduce the obscene profits of financiers.
I am not joking.
sphinx on May 20, 2011 6:51 PM:
Don't worry. When the Repubs get finish with states budgets and the federal budget, there will be rampant illiteracy, no healthcare , no unions, no jobs, no culture, no art, no teachers ( that goes with the illiteracy stuff ), no high speed rail,no women's health services, no abortions, no contraception ( to help prevent abortions ),no medicare, no social security and no infrastructure. But the rich will have the money, the healthcare,the good schools, the retiremnet benefits and chauffered limosines and by the way, who needs infrastracture when you can take a helo to work or pilot your own plane. Hey..this is begining to sound like a banana republic.