Commentary Magazine


Tax Hikes and Noble Lies

Nobody can blame House Speaker John Boehner for trying to keep his members in line on the debt ceiling deal, but who is he kidding by claiming tax hikes will be off the table in the “super committee” negotiations?

On Boehner’s PowerPoint aimed at selling the plan to GOP House members, he wrote the plan “requires baseline to be current law, effectively making it impossible for joint committee to increase taxes.” But his argument seems pretty rickety.

The “current law” baseline can’t account for future changes to the law, so it assumes the Bush tax cuts will expire on schedule at the end of 2012. That would bring in an additional $3.5 trillion in revenues. According to Boehner’s argument, unless Democrats on the committee propose tax hikes that go beyond $3.5 trillion, raising taxes won’t technically count as a deficit reduction.

But does that mean it’s “impossible”? Not really:

There’s no disagreement on this point: the Committee can take up tax reform if it chooses to. The dispute is whether the deal is structured in a way that motivates the committee to do it.

Motivation is the key point here. Republicans don’t want to hash out tax hikes in these negotiations, and would much rather wait to debate the Bush tax cuts before they expire at the end of 2012. The argument is that Democrats have no reason to push for tax increases in the super committee, because the baseline assumes they’ll happen anyway.

It might give cover to Republicans to support this plan – which is possibly their last chance to avoid being blamed for an economic calamity – but it’s not something they should bet on.