By and large, Texas Governor Rick Perry's "new" tax plan – outlined on the Wall Street Journal editorial page – is a retread of the "Cut, Cap, and Balance" plan favored by House Republicans in the summer's negotations over the debt ceiling. The difference is that instead of a massive round of tax cuts for the wealthy, Perry goes with a hugely regressive reform of the income tax system.
Perry explains, "The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate." The new tax preserves exemptions for mortgage interest and charitable donations, and increases the standard deduction for individuals and dependents. In addition, Perry's plan contains a whole host of tax cuts for corporations: under Perry's plan, the corporate income tax rate is lowered to 20 percent, and corporate income can be repatriated at a rate of 5.25 percent.
Finally, Perry takes a page from the House Republican Study Committe with a budget plan that would slash federal spending to the bone, and extract the marrow. "We should start moving toward fiscal responsibility by capping federal spending at 18% of our gross domestic product, banning earmarks and future bailouts," Perry writes, "and passing a Balanced Budget Amendment to the Constitution."
Perry declines to discuss the how of capping federal spending to 18 percent of GDP, but the truth is that there are only so many paths to that number, and each requires the federal government to either reduce or end its commitments to seniors. To borrow from Matthew Yglesias, will we sharply reduce Social Security benefits for seniors? Will we stop paying for their medical care? Will we end social and health care spending on low-income people, children and the disabled? Will we gut college loans?
This plan requires us to do something on this list, and Rick Perry – along with almost every other Republican – knows it. Whether this fact comes up in the media's discussion of the plan is an open question. I'm not optimistic.
