For the second day in a row a taxes trial balloon has floated out of conversations connected to the secret deliberations of the Supercommittee.
Yesterday, the Wall Street Journal’s Stephen Moore penned an article on the Supercommittee that included a line that read: “One positive development on taxes taking shape is a deal that could include limiting tax deductions, perhaps by capping write-offs on charities, state and local taxes, and mortgage interest payments as a percentage of each tax filer’s gross income”
That is not a “positive development,” but rather a political and economic nightmare, a GOP majority-loser as millions of Americans would see their only tax breaks taken away in exchange for future illusory savings, and done so without open debate or even a single Republican having run on a platform of ending the mortgage interest deduction, the charitable deduction or the deduction for state and local taxes. This package, or any part of it, would be a real and massive tax hike on millions of people already paying more than their fair share of taxes and its unveiling would shatter the credibility of the GOP majority in the House as it would rightly be understood as a betrayal of every promise made by every Republican not to raise taxes. It would also instantly devalue all houses –not just the homes of the wealthy– by at least 10% further exacerbating an already terrible loss of confidence in housing. It is the Smoot Hawley of our era, and it is being eagerly pushed by the purists who have no clue about how housing markets work and will be confounded when they set off another round of deflation and foreclosure.
The Congressional GOP once before badly misjudged its core constituency –on immigration reform in 2007. Ideologues persuaded electeds that the people would go along with the sweeping “grand deal,” and what happened was a disaster.
The GOP cannot advance massive legislative plans that it has not first presented to its voters in primaries and a general election and expect those voters to rally to the cause because they are told it is a good deal.
I argued this point with the affable Moore on air yesterday and he admitted again and again that no Republican —not one— had campaigned in 2010 on such a platform, which should end the conversation right there. Better gridlock and an appeal to the voters to replace the obstructionists to spending cuts than a massive tax hike thinly covered with talk of tax reform that is in fact a massive breach of trust. The GOP was not sent to D.C. to curtail the only tax deductions that individual taxpayers find valuable. What a sham.
Today’s Politico keeps up the drumbeat for higher taxes, with a story headlined “Republicans put revenue in the mix.” This is another attempt to test the waters for GOP deal-makers bringing gifts of “lower tax rates” that turn into higher tax bills. Just stop it. It is bad economics and horrific politics. If Democrats won’t cut spending, let them run on being Greece, not trap the GOP into exacerbating the housing crisis while shattering the not-for-profit sector.