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The Price is wrong

Associated Press

In the two weeks since the elections, there's been a subtle shift in Republican rhetoric when it comes to debt reduction and tax policy. Whereas the GOP line in recent years has focused solely on spending cuts, the post-election debate has a new premise: we're not debating whether there will be new revenue; we're debating where that revenue will come from.

While it's a welcome change, it's important to realize that the new Republican line is still very far to the right, and completely divorced from any sensible understanding of budget and/or economic policy.

Consider, for example, what House Republican Policy Committee Chairman Tom Price (R-Ga.) told CNN yesterday. The far-right lawmaker began by saying "a real solution includes both revenue increases and spending reductions," which sounded encouraging, until he explained the fine print.

"Tax revenue, which means broadening the base, lowering the rates, closing the loopholes, limiting the deductions, limiting the credits, and making certain that we identify the appropriate spending reductions so that we have, indeed, a balanced approach. [...]

"Well, again, we would be happy to look at [increased tax rates] if it solved the problem. The problem is, it doesn't solve the problem. We want a real solution, which means increasing tax revenue through pro- growth policies.... Tax increases to chase ever higher spending is a fool's errand. What we need to do is have that balanced approach that we've all been talking about, which, again, is increasing revenues through a process of tax reform, and then spending reductions."

Price twice used the phrase "balanced approach," which is identical to President Obama's preferred language, but the two clearly don't mean the same thing.

In Price's mind, if tax rates go up on the wealthy, and the Treasury starts collecting more money, the Treasury will actually start collecting less money. Why? Because asking "job creators" to pay Clinton-era tax rates will be so awful for the economy, Price's argument goes, there will be fewer wealthy people with less wealth paying less in taxes.

The only acceptable solution, then, is to have even lower taxes, coupled with spending cuts, paid for by closing loopholes and deductions that Republicans still won't identify.

There is no sane economic model in which this makes any sense at all. On the contrary, every shred of evidence points in the exact opposite direction -- higher rates on the wealthy do not depress economic growth, more revenue does not mean less revenue, and there simply aren't enough loopholes and deductions in existence to pay for the GOP's preferred approach.

The larger point is simple: the shift in tone notwithstanding, congressional Republicans and their economically illiterate approach to debt reduction really haven't changed much at all.