Gang of Six Plan Versus Insanity

A Budget Deficit Plan Democrats Would Normally Hate Is Actually Being Stopped by Republicans

Michael Ettlinger and Michael Linden say that despite the efforts of the Gang of Six the plan won’t satisfy House Republican radicals.

In normal times Democrats would be the ones blocking the Gang of Six deficit reduction plan unveiled yesterday on Capitol Hill. The plan sets in motion cuts to programs and public services that Democrats have held near and dear for decades, including the three Democrats in the gang, Sens. Kent Conrad of North Dakota, Richard Durbin of Illinois, and Mark Warner of Virginia. Not just Social Security. Not just Medicare. The plan also puts tight constraints on domestic spending, effectively limiting investments and programs that Democrats have long championed as vital to our economy and our society.

And to top it all off, the plan mandates lower tax rates for the wealthy and corporations. In fact, all the plan offers Democrats is deficit reduction, which ostensibly is something Republicans care about just as much.

Some will look at the trillion dollars of revenue increases in the plan and see that as a Democratic win. But let’s note that Democrats aren’t for taxes per se, they’re for what taxes pay for. In this case, those new revenues would pay for deficit reduction. Democrats certainly care about deficit reduction but Republicans claim that goal as much as Democrats. And even with the revenue increases in the plan, the country would still have low levels of taxation, which would meaningfully constrain the federal government’s ability to support Social Security, Medicare, education spending, scientific research, road repair, and other Democratic priorities.

So, while it’s true that for a given amount of deficit reduction higher revenue means fewer cuts in programs, that’s only a small consolation in a plan that puts constraints on much of the Democratic agenda. And although the Gang of Six requires that the tax system be kept at least as progressive as it is now, that’s very weak tea since the current level of progressivity is defined by the Bush tax cuts that favored the wealthy.

With so little for Democrats to be enthusiastic about in this deal, you might think they would be the primary hurdle to passage of the Gang of Six plan in Congress. And you could be forgiven for thinking President Barack Obama surely would block it. But you’d be wrong on both counts.

The president praised the plan as a “significant step,” and lauded the “potential for bipartisan consensus.” And in the Senate, even with its Democratic majority, there is wide support and a real possibility it could pass.

No, it’s not the Democratic president or the Democratic Senate that are clear roadblocks. The reason the Gang of Six proposal isn’t going to become law any time soon is that the Republican House of Representatives won’t touch it with a $10 trillion  pole.

That just shows how incredibly extreme Republicans in the House of Representative are today. Everyone looks at the Gang of Six plan and knows it isn’t moving because Republicans in the House won’t accept even a deal like this one that is skewed in their ideological direction. Why? Because they look at it and see a tax increase.

Never mind that right now the United States is collecting less in taxes than at any time since 1950 as a share of the economy. Or that our country has just about the lowest taxes of all economically advanced countries. Or even that it was tax cuts that helped get us in this fiscal mess, and that it’s the continuation of those same tax cuts that accounts for much of our future mess.

No, if Grover Norquist of “Americans for Tax Reform” deems a deal to have any “additional” revenue then that deal is unacceptable. Instead of fighting for real fiscal responsibility, the House Republicans end up fighting for Grover Norquist’s famous mission of shrinking government to the size it can fit in the bathtub and then drowning it. That’s a position that can destroy a country. And unfortunately many House Republicans are taking their best shot.

To be fair, there are certainly House Republicans who know better. But too few are standing up publicly to restore the dignity of their caucus as a serious player working in the best interests of their country.

And what of the Democratic Sens. Durbin, Conrad, and Warner, the members of the Gang of Six who helped craft and embraced a plan that in normal times would cause Democrats to blanch? They’re simply being patriots. They see America’s long-term deficit as an existential threat to the nation. So they’ve worked with Republican colleagues to try to come up with something that reduces those deficits, contains large spending cuts to attract needed Republican votes, and tries to save and protect critical public programs, services, and investments to the extent possible. For this they have taken, and will take, a substantial amount of heat from their base of supporters.

That’s understandable. In a more rational universe, a divided Congress with a Democratic president would negotiate a more balanced budget deficit plan that better reflects the diversity of views among the nation’s elected leaders and electorate—a plan that might even be tilted slightly toward progressive priorities. But the House of Representatives is pinned down by the radical wing of the Republican party, which isn’t interested in negotiation. So even this plan, skewed to gather the support of right-wing Republicans, is stalled from the start.

Michael Linden is Director of Tax and Budget Policy and Michael Ettlinger is Vice President for Economic Policy at American Progress.

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Michael Ettlinger

Vice President, Economic Policy

Michael Linden

Managing Director, Economic Policy