The Senate Finance Committee held a hearing this morning on the various budget gimmicks that Congress is considering, including in a vote on the debt ceiling. As the Prospect previewed earlier this week, the chief proposals up for debate were the Corker-McCaskill CAP Act, which reduces government spending to an arbitrary 20.6 percent of GDP, and President Obama’s debt fail-safe trigger, which invokes certain spending cuts and tax increases if the debt-to-GDP ratio doesn’t start improving in 2014.
Republican responses to the fail-safe idea, as reported by The Hill, were predictable. Sen. Jon Kyl called it “the worst possible outcome” because of its potential to raise taxes automatically. It’s odd that he can recognize the absurdity of “automatic” changes to fiscal policy, which will come into effect under unpredictable conditions in the future, when they apply to taxes, but not to spending on crucial government programs. Meanwhile, Sen. Orrin Hatch continued to push the widely discredited GOP talking point that the deficit was caused by out-of-control government spending by saying any bill must come with “spending-based fiscal reforms.” It’s worth noting that even if the deficit were spending-driven, a spending cap would just transfer more spending into the tax code, a more regressive and less transparent way for government to conduct its business.
What’s encouraging, however, is that Democrats stood by Obama’s debt trigger fail-safe, apparently recognizing that if they’ve lost the fight for a clean bill, this represents a good second-best option. The Committee’s chairman, Sen. Max Baucus, said it was the best proposal, while Rep. Jim Clyburn is suggesting it be used as the basis for negotiations set to start tomorrow between Joe Biden and Republican leaders at Blair House. The representatives from the Government Accountability Office and think tanks who testified also supported similar proposals, symbolizing the growing consensus that a revenue increase, from tax expenditures at the very least, needs to be included in this debate.
It doesn’t seem like Republicans have strong arguments against this trigger. Meanwhile it should enjoy increasing Democratic support because it does exactly what they want and need: It sets plans for tax increases (among other things) without making anyone take responsibility for directly implementing them.
Sarah Babbage is an intern with Demos. This piece is part of a series of articles and posts from Demos on Our Fiscal Security.
