New Deficit Reduction Plan Worth GOP Adoption

by Lyman Stone
Columnist

The last week has seen the unveiling of a major proposal to reduce our budget deficit and long-term debt. While neither party has leapt forward and embraced the proposal, Republicans ought to. Having campaigned on a promise of deficit reduction, the current proposal offers Republicans a credible and pragmatic means of delivering on that goal, and a politically savvy one too.

Given that this report is not finalized, any very strong commitment to it would be premature. But what Republicans can and should do is, first, publicize its principles: This deficit-reduction scheme would lower maximum tax brackets from 35 percent to 23 percent, and lower corporate taxes from 35 percent to 23 percent. (The U.S. has one of the highest corporate taxes in the world.) However, it will more than offset this by increases in gasoline taxes (a policy which should be embraced by environmentalists) and sweeping reductions or eliminations of tax credits and other specific provisions of our tax code. Simplification and reduction: This is an admirable policy for our government.

While Republicans may balk at the net tax increase (25 percent of the deficit reduction will come from increased tax revenues due to the closing down of huge tax credits, such as the child tax credit and the mortgage interest tax credit), they should celebrate the monumental slash in spending it would bring. This deficit-reduction package would be 25 percent tax increases and 68 percent spending cuts. (The rest would be interest reductions on debt.)

Proposals to heavily reduce some parts of our military’s funding will meet serious opposition. But Republicans should knuckle down and accept them, provided there are no reductions in the moneys available to support our existing troop deployments in present war zones (primarily Iraq and Afghanistan).

The proposals to cut all departmental budgets by 15 percent across the board, cut the payroll by 10 percent, raise the social security eligibility age and semi-privatize some parts of social security are an unmitigated gain. A similar battle was recently fought in France, with victory now in Nicolas Sarkozy’s hands (and, admittedly, blood in the streets of Paris and Marseilles). Conservatives in the U.S. should fight that battle as well. Spare no budget: No matter how precious a department is to conservatives (yes, that means you, Department of Justice), it should face similar reductions.

Changes to Medicare and Medicaid, as well as the tax status of health care plans, would be beneficial as well, and difficult for either party to accept. Republicans will love malpractice restrictions and loathe taxation of health care policies. Democrats will accept that taxation but find cost-reduction mandates on Medicare difficult to accept.

In sum, Republicans should accept this remarkably conservative plan and claim original credit for the policies espoused (many of which are recycled Bush-era proposals).
And if it flops too heavily, just tell the truth: It was Obama’s commission that wrote it.

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