TheAtlantic.com: Super Committe's Failure was 2 Decades in the Making

[Fergasun]

TheAtlantic.com: Super Committe's Failure was 2 Decades in the Making

Newt Gingrich and the GOP had a master plan to turn the U.S. into a low-tax, small-government society back in 1994. Look how far they've come. (this is the article sub-headline)

But the fact is that Republicans have already won. In 1994, Newt Gingrich -- the man who is now the frontrunner in the Anyone-But-Mitt race -- led the conservative bloc to a sweeping electoral victory, definitively wrenching the party out of the grasp of "moderates" like George H.W. Bush. At the time, the top income tax rate was 43.7 percent and the top capital gains tax rate was 29.2 percent, set by the Tax Reform Act signed by President Reagan in 1986.

...

In short, if Newt Gingrich, Dick Armey, and Grover Norquist had a master plan to turn the United States into a low-tax, small-government society back in 1994, it's safe to say they are ahead of schedule. If they split the difference with Obama -- say, eliminating some tax expenditures to increase revenues and, in exchange, getting the 35 percent tax rate made permanent for the over-$250,000 set -- they could probably get some more entitlement cuts out of the current round of negotiations, like the lower cost-of-living adjustment they want for Social Security. And they would get credit from independent voters for compromising and combining tax increases with spending cuts.

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So, for now, they seem doomed to continue pushing the envelope of crazy, now demanding that tax rates on the rich go down to 28 percent, well below where President Bush left them in 2001. (Of course, with Herman Cain and Rick Perry promising top marginal income tax rates of 9 percent and 20 percent, 28 percent seems downright socialist.)

Which means there's still an outside chance that no one will agree to anything, December 31, 2012 will roll around, and all of the Bush tax cuts will expire. Which is the only thing that has any chance of increasing taxes on the rich and reducing the deficit.

Another somewhat wonky article thought I'd bring to the attention of fellow tailgaters. Of course going down the path they are hasn't really been unsuccessful for the GOP so why not continue to "push the envelope of crazy"?

[Riggo-toni]

Our govt functioned better under Gingrich/Clinton/Armey than at any other point in my lifetime. The current fiscal disaster does not belong to Gingrich at all but rather to Hastert and W, and to some extent Obama.

Gingrich never proposed an unfunded trillion dollar expansion of medicare. The lower capital gains tax rate boosted revenue to the treasury and helped provide the financing for the US dominance in tech companies. W not only rolled back the agriculural subsidy reforms of the 90s - he grotesquely expanded farm subsidies.

[mjah]

I'm wondering if the "set up a trigger, let a super-committee fail to agree on something else, and then let the trigger fire automatically so nobody can be directly blamed for the result" model will become more popular in Congress.

It's the only option currently on the table with any realistic shot of occurring, and that's just because it's automatic. If you proposed exactly the same plan to Congress and made them cast votes for it directly instead of setting it up as a "penalty" fallback, you'd never get it to pass.

Some "penalty." It's the only directionally correct step Congress will allow itself to take!

[Bliz]

I know it's off topic, but this part irks me

TheAtlantic.com: Super Committe's Failure was 2 Decades in the Making

Of course, with Herman Cain and Rick Perry promising top marginal income tax rates of 9 percent and 20 percent, 28 percent seems downright socialist.)

Herman Cain and Rick Perry have not promised top marginal rates of 9% and 20% respectively.

They have proposed flat taxes of 9% and 20%, i.e., top effective tax rates of 9% and 20%. This gets to the heart of one of the most basic, widespread and fundamental misconceptions/points of ignorance about the basic workings of our tax code. Specifically that whether you make $50,000 $500,000 or $5 million per year, the first $50,000 of your income is taxed at the same rate (which is true no matter what number you pick). So even without deductions, people in the 35% tax bracket pay effective tax rates of substantially less than 35%.

For Perry's plan at least, which iirc was an option to stay with what you have or pick a flat tax of 20%, the bottom 80+% should pick to stay where they are because their effective tax rate is below 20%. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456 Somewhere less than the top 20% would get a tax cut, with the cuts going up as income goes up. No word on how he would make up for that huge increase in the deficit, as far as I know.

(The numbers might be much more people with an effective tax rate below 20%. My household income puts me easily in that group that supposedly would be better off with Perry's plan. Wife, one kid, mortgage and my effective tax rate is around 15%. Others I know in similar situations are also well below 20% effective rate)