Kent Conrad: 'That makes so much sense that it’s unlikely to happen'
Sen. Kent Conrad (D-N.D.) is chairman of the Senate Budget Committee, a member of the deficit commission and one of the party's leading voices on tax reform. Recently, he proposed a plan tying an extension of the Bush tax cuts to comprehensive tax reform. Earlier today, he walked me through the details of his proposal, A lightly edited transcript of our conversation follows.
Ezra Klein: I’ve been surprised watching the chaos among the Democrats as they attempt to figure out what to do about the Bush tax cuts. This was a completely predictable legislative battle, and yet it’s been greeted, as far as I can tell, with ample confusion and almost no consensus about how to handle it.
Kent Conrad: Yep. It’s very unclear what’s going to happen.
EK: You’ve proposed tying a short extension of the tax cuts to fundamental tax reform. How would that work, exactly?
KC: We’ve come up with several ideas. One would be to give Congress a certain amount of time, say 18 months, to come up with a reform plan. And then we could begin imposing reductions on tax expenditures across-the-board on some formula basis until something passes. Another possibility is that after whatever period of time you gave Congress to do tax reform, if it wasn’t done, you’d reimpose the Clinton-era rates on at least high-income people.
EK: In the coming months, Congress has multiple must-pass initiatives on the docket, including an extension of unemployment insurance and an increase in the debt ceiling. Is there any move toward tying the extension of the Bush tax cuts to action on those items, rather than letting each fight move forward on its own?
KC: That makes so much sense that it’s unlikely to happen. That’s in a way what the deficit commission was all about. Trying to put things together in a package so you didn’t face these things one at a time.
EK: If the issues aren’t grouped together, the likely outcome seems to be that we’ll blow a hole in the deficit and extend the tax cuts for people making more than $250,000, cut off unemployment benefits for 2 million Americans, and in a few months, Republicans will hammer Democrats for needing to raise the debt ceiling. Aren’t your colleagues concerned about all that?
KC: Well, I hope so. It’s pretty clear.
EK: As a member of the deficit commission, does the difference between the inevitability of extending deficit-increasing tax cuts and the cool reaction towards anything that would seriously reduce the deficit worry you?
KC: Here’s the lens through which I see it. Revenue is the lowest it’s been in 60 years as a share of our economy. Spending is the highest it’s been. That tells me you’ve got to work both sides of the equation. If you look at what the Domenici-Rivlin group will do, at what the Esquire group did, at what the deficit commission co-chairs put out, all of them recognize that you need to work on both sides of the equation. But there are those among us who don’t believe that revenue has any part in this. They don’t see revenue as creating deficits, they think it’s solely a spending issue. It’s an article of faith among them.
EK: But it seems that the dogmatism of the supply-side position has won out. You and many of your colleagues don’t subscribe to the idea that tax cuts are free, and you do worry about the deficit, and Democrats still control the Senate, but there’s not been any evident move to block the extension of the tax cuts unless they’re offset, much less stop them altogether. It seems that the strength of the commitment on the other side, wrongheaded as it may be as a matter of arithmetic, is overwhelming the Democrats, who can’t agree on what to do.
KC: Well, the final card has not been played here. I hope that doesn’t prove to be the case.
Photo credit: Melina Mara/Washington Post.
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