Yesterday I briefly suggested the terms of a possible deal on the so-called fiscal cliff: Extract more revenue by capping or eliminating tax deductions, as per the Romney-Ryan tax reform plan, and leave the Bush tax rates in place.
Can it fly?
Financial Times blogger Cardiff Garcia, while noting that it doesn’t address every sticking point of the fiscal cliff, calls it an “intriguing alternative.”
And House Speaker John Boehner immediately made an overture along these lines, according to a New York Times report:
Speaking for Republicans after a conference call with his Congressional colleagues, Mr. Boehner said he was ready to accept a budget deal that raised federal revenues, but not the top rates on high incomes. And the deal, he said, also would have to overhaul both the tax code and programs like Medicare and Medicaid, whose growth as the population ages is driving projections of unsustainable future debt.
Instead of allowing the top rates to go up, which Republicans say would harm the economy, Mr. Boehner said Washington should end some deductions and loopholes to raise revenues. The economic growth that would result from a significant deficit reduction compromise would bring in additional revenues as well, he said.
Big questions remain: How much revenue? It seems clear that Boehner means more than that gained via “dynamic scoring.” But it’s too early to know how much. And in his speech yesterday, Boehner suggested he will try to extract a lower top tax rate than 35%, which President Obama had offered as part of last year’s aborted grand bargain.
Problematically, a House GOP insistence on entitlement reform is going to collide with an Affordable Care Act, with its own Medicare reforms and Medicaid expansion, that now looks to be settled law. Bottom line: this is merely an opening bid. There’s no reason to think that either side will put all its chips in the middle of the table before negotiations begin in earnest. But I’m pretty confident a deal will get done. The most important five words Boehner spoke yesterday were these: “We want you to succeed.” That’s in stark contrast to the implacability of Sen. Mitch McConnell, whose “top political priority” was “to deny Obama a second term,” and Rush Limbaugh’s “I hope he fails.”