On the morning after the election, I floated an idea to break the impasse on the so-called “fiscal cliff”: that is, the coincident tax hikes and budget cuts that economists fear will blunt the recovery and possibly plunge us back into recession next year. The idea, in short: Pass the tax reforms that Mitt Romney and Paul Ryan proposed as offsets for their rate reductions — but keep rates where they are now.
Extracting revenue from caps on tax expenditures rather than marginal tax rates is hardly a groundbreaking proposal; it was part of last year’s abandoned “grand bargain,” and President Obama himself embraced it in his American Jobs Act proposal.
What I thought was potentially icebreaking was the picture of these new revenues hanging inside a Romney-Ryan tax reform frame. The Economist’s Greg Ip came up with a clever name for this idea that I am kicking myself for not having coined first: the “Obamney tax plan.” And Matthew O’Brien of The Atlantic advises Obama and Speaker John Boehner to ask, WWMD? What Would Mitt Do? as they negotiate. O’Brien also fleshes out the reason why Democrats should jump at the deal: it gives them the revenue they’re seeking while preserving the progressivity of the tax code.
Lately it appears the modified Romney plan is picking up steam on Capitol Hill. (And for what it’s worth, the centrist think tank Third Way is now pushing a variation of it, too.) In a piece headlined “Democrats Like a Romney Idea on Income Tax,” Jonathan Weisman reports in the New York Times:
The proposal by Mr. Romney, the Republican presidential nominee, was envisioned to help pay for an across-the-board income tax cut, a move ridiculed by President Obama as window dressing to a “sketchy deal.” But many Democrats now see it as important element of a potential deficit reduction agreement — and one they can claim to be bipartisan. …
“Let’s just say there’s a renewed interest,” said Senator Kent Conrad, Democrat of North Dakota and chairman of the Senate Budget Committee. “Part of it is people reflecting on Obama’s proposal, but when Romney said what he said, it just added fuel.”
I’ve yet to see a prominent Republican voice unqualified support for this framework, so there’s still a long way to go. But it seems fair to say momentum is headed in this direction. Who knows? Maybe Mitt himself will become involved before it’s all said and done.