Remember yesterday’s GOP talking point about how “baseline budgeting” would make it virtually impossible for the Committee to impose tax hikes? Supposedly, because CBO is required to assume that the Bush tax cuts will lapse next year, the $3.5 trillion in new revenue that will come from that lapse is already part of the Committee’s “baseline.” In order for them to hit their target of $1.5 trillion in additional savings, they’d have to recommend tax hikes above and beyond that $3.5 trillion. Which, with an election coming up, they surely aren’t going to do.
Just one problem: None of it is true. Or at least, none of it is in the bill. Tapper reports:
One bottom line of this debate is that it seems that the baseline the Super-Committee uses will also be a point of contention.
Experts on the CBO scoring process say Republicans are making a flimsy argument. There’s nothing in the legislation that would prevent the Super-Committee from proposing revenue increases. Nothing. And anyone in Congress can ask for alternative benchmarks.
The truth is the CBO is often called to score bills in different ways, and anyone on the Super-Committee could certainly request that it be done in a certain way with any assumptions…
Rep. Paul Ryan, R-Wisc., for instance, requested that CBO score his “Roadmap” against an “alternative fiscal scenario” that assumed extension — not expiration — of the Bush tax cuts. “As you requested, the analysis in this letter compares the Roadmap with the alternative fiscal scenario…” the CBO wrote to Ryan.
Former Bush econ advisor Keith Hennessey seems to think that the baseline will govern Committee action on tax rates but won’t affect their ability to raise taxes through other means, like closing loopholes. Assuming Tapper’s correct, though, not only will the Committee spend the next three months bickering about where to find savings, they’ll be bickering about what standard should be used to measure whether a new spending cut or revenue-raiser qualifies as a “savings” in the first place. Which means the GOP is caught between tax increases from the Super Committee, the expiration of the Bush tax cuts next year if the Committee does nothing about revenues, and sharp cuts to defense if Congress doesn’t enact the Committee’s recommendations. How sharp? Rich Lowry:
Just talked to a defense expert. This is how he understands the deal, and it sounds pretty hair-raising: In the first tranche, it freezes defense for fiscal year ’12 ($23 billion below the Ryan budget), and then freezes it for the next ten years. By contrast, the original Boehner proposal had increased spending for defense in fiscal ’12 and ’13. The first tranche basically bakes into the cake President Obama’s proposal for $400 billion in defense cuts over twelve years. Then, there’s the 50/50 trigger for the second tranche if the committee doesn’t do anything. That could be another $500 billion beginning in fiscal year ’13. Overall, it could be a 12–20 percent cut in the defense budget over time, which will likely have to come out of personnel, procurement, and training. In their wisdom, congressional negotiators apparently decided over the weekend that the next ten years will be marked by no significant military challenges to the United States or our allies.
The defense cuts are so transparently a sop to the left in lieu of including tax triggers in the bill that it’s almost hard for me to take them seriously. They are serious, to be sure, insofar as they’ll affect readiness, but if a significant military challenge does arise, Obama and his caucus will fold like an accordion when the GOP pounds the table and demands that the cuts be rescinded. The trigger guarantees that we’ll be less prepared for that challenge than we otherwise would have been, but don’t forget that (a) half of the Super Committee will be Republicans looking for ways to head off the defense cuts, (b) there’s already some leeway built into the definition of “defense” in the bill so that “defense” cuts won’t necessarily fall entirely on the military (no more TSA, maybe?), and (c) any automatic cuts to defense via the trigger will be reduced by the amount of total cuts agreed on by the Committee and ratified by Congress. E.g., if the Committee manages to agree on $1.2 trillion in savings instead of $1.5 trillion and Congress approves it, only the $300 billion gap would implicate defense as part of across-the-board discretionary cuts. And needless to say, if Republicans take back the Senate next year and succeed in ousting The One, all of this will change. That’s the best way to understand the bill, I think — chiefly as an attempt to set a new baseline politically and then to punt, which may help explain why even Buck McKeon is willing to vote for this thing. Depressing, but that’s what you get when you share power with a party that wants entitlements to be sacrosanct until the day the budget collapses from trying to prop them up.
Here’s video from National Journal of protesters screeching in the gallery today, “Boehner, get off it, it’s time to tax corporate profits” and “Hey Boehner, get a clue, it’s about revenue.”