Tuesday, August 2, 2011

How They Are Going to Mess with Taxes in the New Joint Committee

Prepare for tortured language, distortions and "baseline" taxes in the new Joint Committee "Super Congress" that has been formed as part of the deficit extension bill. Here's Keith Hennessey providing some examples to "simplify" what will be going on in the committee:
Charles Blahous was able to simplify two points about how the new Joint Committee will deal with taxes in the Budget Control Act. I thank him for these examples.

Both the following conversations are hypothetical, designed to illustrate concepts. These are not quotes from actual Administration officials.

Question 1: What does a current law baseline mean for hypothetical tax increase proposals in the Joint Committee?

Administration:  We want to let current rates expire for those earning more than $250 K.

Joint Committee: Sorry, that doesn’t score as reducing the deficit.  Under current law, those rates would expire for everyone. You can include it if you want, but it won’t help you meet your deficit reduction target.

Administration:  OK, then, we want to impose a new surtax on sugary breakfast cereals.

Committee: OK, that counts as reducing the deficit.

The Administration is claiming the new Budget Control Act does not “require” the Joint Committee to use a current law baseline, I think because they’re getting blowback from their Left for agreeing to it. After reexamining the legislative language, I agree with House Budget Chairman Paul Ryan that this claim is absurd.

Question 2: Is the Joint Committee required to use a current law tax baseline?

Administration:  We want to score a tax proposal in relation to a different baseline.  Nothing prevents you from requesting that.

Committee:  Well, nothing prevents us from requesting that or anything else from CBO, but the law says our proposals must be scored relative to the current law baseline, and that we must vote on a report that includes that score relative to the current law baseline.  So, scoring by other baselines has no value to us. 
Translation: Hold on to your underwear, tight.

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