The corporatist wing of the Democratic party, in other words Third Way, thinks the plan to lower taxes on the rich and make everyone else hurt proposed by catfood commission chairs Bowles and Simpson is just peachy.
This is the first real leadership test for both parties in a divided capitol: will they embrace the Fiscal Commission recommendations, or cop out and pick the plan apart?
No plan will be perfect, but without a serious, long-term commitment to balance the budget, we’re going to stifle economic growth for decades and ultimately have to make draconian cuts in spending. Only by acting aggressively now do we avoid a budget doomsday.
An actual economist, however, begs to differ. Here's Paul Krugman:
OK, let’s say goodbye to the deficit commission. If you’re sincerely worried about the US fiscal future — and there’s good reason to be — you don’t propose a plan that involves large cuts in income taxes. Even if those cuts are offset by supposed elimination of tax breaks elsewhere, balancing the budget is hard enough without giving out a lot of goodies — goodies that fairly obviously, even without having the details, would go largely to the very affluent.
I mean, what’s this about? There is no — zero — evidence that income taxes at current rates are an important drag on growth.
Oh, and they’re talking about raising the retirement age, because people live longer — except that the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever.
The recommendations of the chairs--from the big tax cuts to the decimating of the federal workforce--just don't fit the reality of the current economy with high unemployment, the loss of equity of so many retirees and near retirees in the one major asset most held--their houses, and the wage stagnation that has resulted in the great income equality in the nation. That's not even addressing the costs of two wars and the Bush tax cuts.
Liberal members of Congress and AFL-CIO President Richard Trumka address these realities in their statements in reaction to the proposal.
“The Simpson-Bowles deficit reduction plan is extremely disappointing and something that should be vigorously opposed by the American people," Sanders said in a statement.
Sanders has been among a group of congressional liberals who have threatened to defeat the commission's recommendations if it curtails Social Security benefits in any way. Sanders has said of the commission's recommendations that Congress would "vote it down" if it touched on Social Security, and Rep. Raúl Grijalva (D-Ariz.), joined by 136 other House Democrats, has written to similarly warn the commission....
The proposals released on Wednesday, charged Grijalva, the chairman of the Congressional Progressive Caucus, would only favor the wealthy.
"The path this plan would set is not good for the public. Congress should be having a realistic, productive conversation right now about how to reduce our budget deficit and maintain a secure retirement system for those who have earned it," he said in a statement. "Instead, we’re debating a proposal from a commission dedicated to cutting crucial social programs and reducing corporate and upper-income taxes at the same time. This is not a recipe for a healthier American economy."
"The chairmen of the Deficit Commission just told working Americans to 'Drop dead,'" Trumka said in a statement. "Some people are saying this is plan is just a 'starting point.' Let me be clear, it is not."
This is probably not the plan that will ultimately emerge from the commission. It could just be sort of a head fake, a much more extreme proposal than will come from the full commission, so that that proposal is perceived as reasonable by comparison. But if Third Way loves it, then who knows. It could be the plan, in which case it sure wouldn't pass the House in the lame duck session.