Harry Reid’s deficit plan: It’s still about higher taxes

Who says congressional Democrats aren’t trying to cut spending? Senate Majority Leader Harry Reid (D-Nev.) seems determined to chop discretionary budgets by more than $100 billion this year, regardless of what economists (and the unemployment rate) may suggest about the fragility of the recovery.

Granted, it’s not that Reid is calling for the cuts to go into effect on March 1, as currently scheduled. In fact, he says the opposite. But the alternatives that Reid and House Democrats are floating are such political nonstarters, it’s hard to imagine anything else happening.

As part of the 2011 debt-ceiling deal, Congress agreed to reduce projected deficits by more than $2 trillion over the subsequent 10 years. About half of that was implemented right away through lower spending caps; a special committee was created to come up with a plan for saving an additional $1.2 trillion. If the committee failed -- which it did, predictably -- the savings were to be achieved through annual across-the-board spending cuts, starting Jan. 1, 2013.

Congress agreed in early January to postpone the cuts until March, and few people on Capitol Hill like the idea of an across-the-board haircut in defense and discretionary programs. Nevertheless, there’s a gulf between the GOP’s proposed changes and the Democrats’ desires. The former want to spare the Defense Department but keep the total amount of cuts and the timetable for making them the same. The latter don’t seem to mind the idea of a smaller Defense Department, but they don’t think now’s the right time to be pulling federal dollars out of the economy.

On ABC’s “This Week” broadcast Sunday, Reid said: “We need to keep our eye on the prize and continue doing something about spending, but I think that what we need to do is do some of the things that Mitt Romney talked about. He said there’s some low-hanging fruit; there are a lot of tax loopholes that should be closed. I agree with him. We haven’t done that.”

That may be the nicest thing Reid has ever said publicly about Romney. He went on to point to the usual Democratic litany of loopholes that need closing: subsidies for the oil and gas industries, tax breaks for companies that move jobs overseas, deductions for corporate jets. That’s all small beer, and as host George Stephanopoulos pointed out, Republicans just agreed to let almost $700 billion worth of tax cuts expire. They’re not willing to go back to the revenue well.

To which Reid replied: “George, the American people are on our side. The American people don’t believe in these austere things. We believe that the rich should contribute. We believe we should fill those tax loopholes, get rid of them, I should say. And that’s where we need to go.” He added that defense cuts have to be included in any deal regarding the March 1 “sequester” because the Pentagon has largely been spared in prior reductions.

Just to be clear, Stephanopoulos asked, was Reid saying that higher taxes would have to be included in a deal to settle “any one” of the three big fiscal battles to come (the sequester, funding the government for the second half of the fiscal year and raising the debt limit again)? “Yes, the answer is definitely yes,” Reid said, adding, “And I’ve got a pretty good fan base for that: the American people, Republicans, Democrats and independents.”

That just settles it, huh? It’s a negotiating tactic, to be sure, but Reid’s stance suggests the talks with Republicans will go nowhere.

Then, on Monday, House Democrats put forward an actual legislative proposal to replace the March 1 spending cuts with ... higher taxes on oil and gas companies, a minimum tax on millionaires and billionaires, and lower farm subsidies.

Democrats sound like the party of One Note Johnny, whose solution to every fiscal problem is higher taxes on big corporations, agribusinesses and wealthy Americans. To maintain a shred of credibility, the party needs to take a cue from the Senate’s “Gang of Six” or the Democrats who supported the deficit-reduction plan laid out by Erskine Bowles and Alan Simpson. As much as they talk about a balanced approach to shoring up Washington’s finances, they never seem to offer anything that meets the description.

This is not to say they’re wrong about the timing of the cuts to come. But it’s long past time for lawmakers to agree to a plan to bring the deficit under control.

And House Republicans deserve no plaudits either. They’re pushing a bill called the Require a PLAN Act -- PLAN standing for the Require Presidential Leadership and No Deficit Act. Yes, that spells PLAND, not PLAN, and the proposal is every bit as brain dead as whoever botched the acronym.

The measure would require President Obama to do something House Republicans have never done themselves, which is to propose a budget that would eliminate the deficit within 10 years. If Obama’s first submission didn’t do it, he’d have until April 1 to submit a revised one that did, including an explanation of the policy changes that would lead to balance.

Of course, Congress routinely disregards the policy proposals in presidential budgets. More important, Congress, not the White House, controls the government’s purse strings. Congress approves the spending bills, tax laws and benefit programs that determine how big a deficit Washington will have each year, if any. The president can veto any of these measures, which gives him a lot of influence. But Congress’ control over the annual appropriations needed to run the government gives it enormous leverage in any negotiations. Obama can’t spend a dime that Congress doesn’t give him.

What Republicans really seem to want here is for Obama to give them some political cover for when they start carving into entitlements. That’s a pipe dream, however. Obama may not have done much to improve the federal government’s finances, but with one exception, he’s expertly avoided getting out in front of the GOP when it comes to entitlement savings.

The exception is the $700 billion-plus that the 2010 healthcare reform law shaved from projected Medicare spending. Republicans have blasted Obama repeatedly for that -- which the public should keep in mind this week when the GOP complains that the president hasn’t done anything to rein in out-of-control entitlements.

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