No matter how this raucous debt ceiling debate turns out, the
back-and-forth among the White House and congressional leaders has
turned up serious reforms.
No matter how this raucous debt ceiling debate turns out, the back-and-forth among the White House and congressional leaders has turned up serious reforms. The roller-coaster nature of these negotiations is not the textbook way to get things done, but it hasn’t been vapid, either. Substantial ideas have been put forward.
Look at some of the proposals that have emerged from the Senate’s Gang of Six – Democrats Mark Warner, Kent Conrad and Dick Durbin and Republicans Tom Coburn, Mike Crapo and Saxby Chambliss. We’d be loopy to not enact these ideas, now or later.
Consider these changes:
Collapse the number of tax rates: The Gang proposes flattening our six individual brackets to three. They would range from 8 percent to 29 percent of income.
Do it. A flatter tax code would make the system less confusing for individuals and companies.
Lower the corporate income tax rate: Knocking down the corporate rate from a high of 35 percent of business income to 23 percent to 29 percent would give businesses more cash to invest. And investment means jobs.
Unfortunately, capital gains tax rates would not go down under the Gang of Six plan, which could deter investment. But a lower corporate income tax rate should give businesses more capital to work with. Plus, companies worldwide often pay lower corporate rates than here.
Modify or end tax exemptions: We can’t lower rates without making up for the lost revenue. Curtailing exemptions gets you there.
True, even modifying some exemptions, like the home mortgage deduction, will be a tough sell. Americans probably won’t stand for ending or tweaking as many as reformers might like. But these tough calls will make our tax code more efficient and understandable, and that will help individuals and businesses.
Change the way government benefits are calculated: Many economists agree that the Consumer Price Index overstates the cost of living. By using a “chained-CPI,” a modified way of calculating annual price hikes, we’d get a more realistic assessment. Retirees may draw fewer benefits, but the change could save the treasury serious bucks.
It’s way past time to do this. President George W. Bush proposed something like this when he tried to reform Social Security, but Congress never took him up on it. People deserve cost-of-living adjustments, but they must be realistic.
Capping discretionary spending: Many people focus on the 1990 budget agreement as when President George H.W. Bush agreed to raise taxes. But the more consequential reform was the bipartisan agreement to limit the amount Congress spends each year on discretionary programs like roads and bridges, law enforcement and health clinics. Those caps helped control such spending through the 1990s.
Since then, the caps really have not been enforced. The Gang envisions a return to serious caps. Again, excellent.
Repealing the health care bill’s long-term care entitlement: One of the most overlooked problems in Congress’ 2010 health care bill was the so-called CLASS Act. The provision created a way for seniors to be guaranteed access to long-term care services, such as nursing homes.
A good goal, but the bill would fund this option by taking money from enrollees now, using it to reduce the deficit and promising to pay benefits later. Budget hawks rightly have called this a shell game, and even the Obama administration has admitted its problems. Hooray to the Gang for wanting to repeal it until a more sound financial arrangement can be worked out.
Yes, the Gang of Six’s ideas require Congress to follow through. And who knows whether that will happen, given the debt crisis hijinx. But as awful as this moment it has been, it has produced a road map for our future.
William McKenzie is an editorial columnist for The Dallas Morning News. Reaach him at [email protected].
