The response by conservatives and liberals to an initial offering by co-chairs of President Obama’s deficit commission this week could not have been more different.
Liberals have attacked the report with rabid animosity.
Conservatives have largely been quiet, with a few statements of cautious and qualified support for the draft proposal as a start to talking about the nation’s deficit and debt.
The one conservative group that has been outspoken in its criticism of the report is Americans for Tax Reform, the 25-year old Washington group run by anti-tax crusader Grover Norquist.
ATR says that the tax reform proposal includes a nearly $1 trillion dollar tax increase, pointing to $961 billion in increased revenue over 10 years. The money comes from eliminating what the report calls “spending in the tax code,” much of which is exemptions and loopholes. This is a large part of what even conservatives support as part of broad-based tax reform.
Ryan Ellis of ATR said that plan, however, “is not tax reform.”
“It looks like tax reform but it’s a façade for what is actually a huge tax increase,” Ellis said. “One of the preconditions of tax reform is that it has to be a tax decrease.”
Ellis says that even though rates would drop under the plan, and be simplified into three tax brackets, the government would raise the amount of tax revenue that it keeps from its historical average of roughly 18 or 19 percent of the economy to around 21 percent.
“It would lead to an increase in the size of government, because the historical norm is that the government has spent more than it takes in. So if you raise revenues from 18 to 21 percent of the economy, you have to expect that spending is going to be 23 to 25 percent of the economy. Because that’s history,” Ellis said.
The current spending levels are at nearly a quarter of gross domestic product, which is higher than any point in U.S. history since World War II. After World War II, President Harry Truman reduced the size of government from about 40 percent of GDP to 20 percent of GDP. It dipped down to 18 percent under President Dwight Eisenhower, went up above 20 percent under President Jimmy Carter, and went back down to 18 percent under President Bill Clinton.
Under President George W. Bush, the size of government rose from roughly 18 percent to 22 percent, the biggest increase under any president since Franklin Delano Roosevelt.
But not all conservatives agree with ATR that the deficit commission report represents a tax increase, particularly staffers for some of the Republican lawmakers on the commission. They say that the lowering of rates and elimination of loopholes and exemptions will broaden the base and make the system more fair. They also say that the proposal includes significant spending cuts.
“They’re going to dismiss a document that has $400 billion in discretionary spending cuts?” one GOP aide said. “75 percent of this is spending cuts, and serious options too.”
The aide admitted, however, that spending as a percentage of the economy would go up.