This week saw the start of budget negotiations between the House of Representatives and Senate. But as Republicans and Democrats sit down together less than a month after a government shutdown, will the two sides be able to find common ground? Global Public Square asked 12 commentators, analysts and policy makers for their take on what Congress should be discussing – and what an agreement should include. All views expressed are the writers’ own.
Major tax reform – Michael R. Strain, American Enterprise Institute
My wish list for the current round of budget negotiations is pretty easy to spell out: Structural reforms of Medicare, Social Security, and Obamacare to significantly slow their spending growth in the decades to come; major tax reform for households, including family-friendly reforms and severe curtailment of popular tax breaks like the exclusion for employer-provided healthcare and the mortgage interest deduction; corporate tax reform which significantly lowers the corporate rate (down to zero, ideally); and an increase in discretionary spending on socially valuable infrastructure, basic research, and other public goods.
Of course, if you think that will happen, then, to borrow from the metaphor, I’d like to sell you a major health insurance reform policy with the promise that if you like your current plan then you’ll get to keep it.
Since we won’t come close to a grand bargain, let alone to solving all our long-term budget problems, I’ll be happy if the current round of budget negotiations moves us in the right direction.
It is possible, though not probable, that chained CPI’s (Chained Consumer Price Index for All Urban Consumers) day has come. As a more accurate and lower measure of inflation, chained CPI would both slow the growth of Social Security spending by trimming cost-of-living adjustments and slow inflation adjustments to tax brackets, raising tax revenue without explicitly increasing taxes. It is also possible, and probable, that the GOP will be able to trade relief from this year’s sequester cuts to discretionary spending for entitlement spending cuts in future years. Conservatives should support such a trade, provided of course that there is an enforcement mechanism for the future cuts other than “we promise.”
Increasing discretionary spending this year by decreasing entitlement spending in the future is a good deal, as is using chained CPI. Conservatives and liberals alike should declare this “humble bargain,” if enacted, a success.
Michael R. Strain is a resident scholar at the American Enterprise Institute