Panetta-Burns 2016

Here’s a funny thing that Public Policy Polling does: in order to test how many people would say they have an opinion of something that doesn’t exist, PPP came up with a non-existant debt reduction plan (similar in name to Simpson-Bowles) and asked people if they had an opinion on it. An astounding 25% of Americans said they had an opinion on Panetta-Burns; compare that to 39% of Americans who have an opinion on Simpson-Bowles. This happened on the same day that an all-star cast of economists offered their blueprint to tackle the budget (and Twitter was also hilarious, so, basically, a goldmine for me).

First, Simpson-Bowles. This is still a thing that’s happening in a little under a month. David Brooks at the New York Times believes that Congress should solve the whole thing with a giant Grand Bargain — something that has obviously worked well in the past. Actually, it was a Grand Bargain in the summer of 2011 that led us to our current fiscal predicament. When Republicans used the national debt as a bargaining tool for a more palatable budget, the deal struck involved sequester cuts in place for 2013, with the assumption we would solve it by now. The last Grand Bargain needed a Truly Grand Bargain to solve. If we truly need not jump off the “fiscal cliff,” then why can’t Congress call the whole thing off and repeal the sequester cuts? That seems like the easiest solution that does the least amount of harm.

At the heart of the debate over the fiscal cliff, which I’ll refer to as the “fiscal curb,” is what to do with taxes. This brings me to the all-star cast of economists: Roger Altman, William Daley, John Podesta, Robert Rubin, Leslie Samuels, Lawrence Summers, Neera Tanden, Antonio Weiss, with Michael Ettlinger, Seth Hanlon, and Michael Linden have a paper out describing how they would achieve meaningful deficit reduction based on two key standards. They would have “progressive, revenue-enhancing, efficient, simplifying, and pragmatic tax reform” and “pragmatic spending cuts that do not undermine the middle class, the poor, or seniors.” Besides the authors’ love of the word “pragmatic,” what I take from this is that they’re trying to outline the ideal liberal plan: it would have a substantial amount of revenue increases (especially from the upper class) and would try to leave entitlements mostly alone.

For taxes, the authors propose some things that Democrats have been demanding for years, and other things that I haven’t yet heard of. In the first category, they would return the top marginal tax rate on personal income up to 39.6%, extend the Earned Income Tax Credit, implement a new Estate Tax with up to $2 million in exemptions (indexed for inflation), eliminate the Alternative Minimum Tax, and change the Capital Gains tax; in the second category, they do some wonky things to personal exemptions, itemized deductions, dependent exemptions, and health care exclusions that help to keep the reforms progressive.

On the spending side, they focus exclusively on health care costs. They change the price and payment mechanisms for medical services, get the states involved in lowering costs, extend Medicaid rebates to Medicare, use systemic reforms to increase efficiency, and (one more time, with feeling) shift costs onto the wealthiest Americans. The new revenue increases and spending cuts combine to create $4.1 trillion in deficit reduction, which should make everyone breath a little bit easier.

Instead, no one really know what’s going on with the fiscal curb, other than that it is bad and it will happen soon. Which brings me back to Twitter. It is sad that Public Policy Polling can get away with, essentially, trolling the American people by asking them if they had thoughts on the made-up Panetta-Burns plan. But they did. One of the main reasons why Congress can get away with its shenanigans — the fiscal curb, for example — is that there’s no pressure from us, the American people, to change that. The elections in 2012 may have resulted in the reelection of President Obama, but not enough changeover occurred to really see any significant change soon. If we don’t know enough to force Congress to align with our views, then they have no incentive to do so and fall back on fighting for whatever ideology they subscribe to. Panetta-Burns doesn’t annex Canada, have death panels or end the national debt tomorrow, but the average American wouldn’t know any better. We wouldn’t even need tax reform if Americans knew enough basic calculus to create a smooth tax function that assesses marginal rates as a function of income. Instead, we’ll settle for automatic sequesters, unnecessary Truly Grandiose We-Swear-This-Is-The-Last-One Bargains, and President Obama’s Death Star.

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