One of the new twists of this year’s Republican budget is that Republicans are trying harder to present themselves as upholding ideas that have bipartisan support, making President Obama the partisan outside the consensus. The biggest example here is Medicare, where Paul Ryan enlisted Ron Wyden to provide him with bipartisan cover on Medicare.
Ryan is also taunting Obama on tax reform. In a speech at the American Enterprise Institute yesterday, Ryan explained that there’s a growing bipartisan consensus that we should close tax deductions and loopholes and lower rates. “What we have here on tax reform is a new emerging consensus,” says Ryan. “The president and his party leaders are outside this consensus even though his own Treasury Secretary says the better way to go is to broaden the base and lower rates.”
Now, there’s not really a growing consensus that tax reform is good. The consensus has existed among economists forever. The problem is that we can’t have tax reform because the two parties strongly disagree on how much revenue to raise and what proportion of the tax burden should be paid by the rich. In his negotiations with House Republicans, Obama proposed to raise more revenue while lowering tax rates through tax reform. The negotiations broke down because Republicans wouldn’t accept higher revenue, not because Obama wouldn’t accept lower rates (or spending cuts, which he also endorsed.) In his speech, Ryan cites the tax reform deal signed by Ronald Reagan in 1986. That tax reform eliminated the preference for capital gains — a concession Ryan and his Republican colleagues refuse to make.
So in what sense is Ryan in favor of tax reform and Obama opposed? Not in the rhetorical sense — as Ryan notes in this very speech, Obama’s
press Treasury secretary has spoken out for tax reform. (Unless Ryan is trying to claim that Tim Geithner has been taking rogue positions against his boss.) The difference is that Ryan has put on paper that he wants to lower tax rates. He won’t say how he plans to make up for the lost revenue, which would be some $6 trillion over a decade.
Everyone in politics is for lower rates offset by unspecified deductions. But of course identifying the deductions you plan to eliminate is not some detail. It is the whole trick of it. The only concrete element of Ryan’s tax plan is a gigantic rate cut that would largely benefit the rich. The rest of it is just a game of hide the ball.