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The progressivity of Simpson-Bowles cont'd

By Ezra Klein

A number of the fiscal commission's staffers have been in touch to argue that the "current law baseline" that the Tax Policy Center is judging their proposal against isn't very useful. That's a world in which the Bush tax cuts expire. Compared with a world in which the Bush tax cuts are extended -- which they rightly argue is the world we're probably facing -- they say the commission's first tax option is distributionally neutral, or even slightly progressive.

But it's worth taking a step back on this: What it means, essentially, is that President Obama's fiscal commission is offering tax-reform options that are substantially less progressive than the rates we saw under Bill Clinton and quite near to the distributional preferences of George W. Bush. And that's after they threw in a cap on the maximum amount of revenue the federal government can raise. Change we can believe in, I guess.

By Ezra Klein  | November 16, 2010; 6:42 PM ET
Categories:  Taxes  
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Next: Reconciliation


I don't know if it was there earlier today, but TPC's page now includes a chart that shows the effects of the Simpson-Bowles plan with the Republic deficit policy (nee "tax cuts") extended. It's still regressive on the whole.*

Are those unnamed staffers on the Peterson Foundation payroll? Why are you granting them anonymity?

* The lowest quintile sees the smallest decline in after-tax income, but the decreases for the second and third are greater than for the fourth and fifth.

Posted by: MrSix | November 16, 2010 8:27 PM | Report abuse

Ezra, I'm sure you have your reasons to grant anonymity to these fiscal commission staffers (you did agree to the sourcing terms before they shared info, right?), but you owe it to your readers to at least identify whether these "staffers" are federal employees or just one of Pete Peterson's embedded lobbyists. To quote a Post story from last week, "Many deficit commission staffers paid by outside groups":

"Many of its employees aren't employed by the panel at all...

For example, the salaries of two senior staffers, Marc Goldwein and Ed Lorenzen, are paid by private groups that have previously advocated cuts to entitlement programs. Lorenzen is paid by the Peter G. Peterson Foundation, while Goldwein is paid by the Committee for a Responsible Federal Budget, which is also partly funded by the Peterson group...

Barbara B. Kennelly, a former Democratic House member from Connecticut who heads the National Committee to Preserve Social Security and Medicare, said the commission's staffing structure is "unprecedented" and casts further doubt on its fairness..."

Posted by: beowulf_ | November 16, 2010 11:39 PM | Report abuse

On second thought, I shouldn't be so hard on Ezra, he does seem appropriately skeptical about the talking point they were selling. I just saw Charles Ferguson's amazing "Inside Job" last night and it has sensitized me to the issue conflict of interests from seemingly disinterested economists and other experts.

One notorious example (not mentioned in the movie) was MIT professor Jon Gruber extolling to Ezra and other reporters the many wonderful, delicious things about the Obama's healthcare plan. He neglected to mention the plan's very best feature, the six figure consulting contract ($392,000 to be precise) that HHS paid to one Jonathan Gruber of Lexington, Massachusetts.

Posted by: beowulf_ | November 16, 2010 11:58 PM | Report abuse

It's a bit sad that your progessivism is lexically intertwingled with progressive rates of taxation. Is it really so important to you that we take proportionally more from people that happen to make a lot of money in one year to make transfer payments to other people? It seems bitter and sad to be upset that this injustice is not happening more broadly. Why not start from the baseline that even using a flat percentage basis for taxation is progressive? If I make about 5 times more than the average person, I should pay about 5 times more in taxes. That's progressive compared to say, my license plate fee or my homeowners bill, neither of which take into account my income.

I think you should understand that this attitude causes a huge amount of resentment from folks that are well of, but also from those that hope to be well off.

Posted by: staticvars | November 17, 2010 12:59 AM | Report abuse

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