Yesterday, Erskine Bowles and Alan Simpson, the co-chairs of President Obama’s deficit commission, released a revised proposal that will be voted on Friday.
Bowles and Simpson have undoubtedly worked hard at a thankless chore these last few months. They have resisted the temptation to demonize all spending cuts and focus exclusively on raising taxes. They have put forward many reasonable individual reforms that warrant consideration. But overall the Bowles-Simpson package is what this commission was designed to produce--a massive tax hike that will keep the federal government at a size and scope that is historically high for this country. Consider the following analysis from Steve McMillin of Hamilton Place Strategies.
For revenues, an average federal tax burden of 21% of GDP would be three percentage points higher than the historical average of about 18%. In fact, the average federal tax burden would be higher than the previous historical record for any one year set in 1944, the year of the Normandy invasion. While there is arguably a balanced level of effort devoted to spending cuts and revenue increases, the targets chosen would enshrine a larger federal government; largely because the proposal’s starting point is the unusually high level of Federal spending that exists today.
Pretty stark stuff. If Congress adopted Bowles-Simpson (which it thankfully will not), the average tax burden would be greater than anything previously suffered in American history and government would be forever large. No thanks. As a comprehensive package, Bowles-Simpson ought to be thrown in the trash.
It’s time to go back to the drawing board and do this right. We as a nation need to set an uppermost limit to the size and scope of the federal government. I would argue for a spending limit of one fifth of the economy, the historic average since World War II. Then we need to keep tax increases off the table. Period and without compromise, no matter what the spreadsheet propeller heads tell us. And once we do, we’ll have a foundation to come up with a solution to our fiscal situation that doesn’t mortgage away America’s future as the land of the free.