The 111th's biggest loser: Tax policy
The real loser of the 111th Congress has been tax policy. Most other issues the Congress took on, for all the compromises and inadequacies and delays, were moved forward. Tax policy was moved backwards.
The most egregious thing about the tax-cut compromise -- which, as I've said before, I supported given the options on the table -- was that it meant the Democratic Party was saying that the Clinton-era tax rates on the country were too high. But the real damage wasn't done during the deal-making. It was done in the 2008 campaign, when then-candidate Obama committed himself to holding taxes down for all income below $250,000. The tax cuts for the rich might've been more offensive, but from a fiscal standpoint, they were less consequential.
Then came the fiscal commission, which recommended that taxes get capped at 21 percent of GDP. Capping tax revenues is not something you generally do when you're trying to balance the budget, but they thought it might win them some Republican votes. It's not at all clear that it did.
Nevertheless, a Congressional Budget Office report on taxation shows how absurd that cap was: "We project that under current law, federal revenues will reach 21 percent of GDP in fiscal year 2020." That is to say, if the Bush tax cuts were allowed to expire, tax revenue would reach 21 percent of GDP.
So not only did Democrats agree that the Clinton-era tax rates were too high, but they created a commission that said they were so high that there should literally be a law passed making sure they can't go higher. Way to go, guys.
| December 21, 2010; 5:33 PM ET
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