Fix The Debt: Avoid Tax Hikes and Spending Cuts With a Package of Tax Hikes and Spending Cuts

Moneybox
A blog about business and economics.
Nov. 20 2012 5:00 PM

Fix The Debt: Avoid Tax Hikes and Spending Cuts With a Package of Tax Hikes and Spending Cuts

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WASHINGTON, DC - NOVEMBER 01: Co-chairmen of the National Commission on Fiscal Responsibility and Reform, former Sen. Alan Simpson, (R-WY)(R), and Erskine Bowles (L), participate in a Joint Deficit Reduction Committee hearing on Capitol Hill, on November 1, 2011 in Washington, DC.

Photo by Mark Wilson/Getty Images

The dishonesty with which the "Fix The Debt" campaign is dealing with the fiscal cliff is really breathtaking. I don't think that reducing the long-term budget deficit is a very good idea. But suppose you did think that it was not only a good idea, but the very most important economic problem in the world. Then why would you produce this video denouncing the dread "fiscal cliff" of tax hikes and spending cuts?

Fix The Debt's critique of going over the cliff is that it would entail reduced services "for those who need them most" but in fact the spending cuts are designed to do their best to spare the poor. Does that mean the poor won't suffer from cliff-related spending cuts? No, it doesn't. But that's simply because there's no way to enact large spending cuts that hold the poor totally harmless.

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Then on the tax side, the cliff is said to entail hikes on "those who can least afford it." That's true. The fiscal cliff involves the end of the payroll tax holiday. But nothing in the Simpson-Bowles proposal would address that. Where Simpson-Bowles differs from the fiscal cliff scenario is that it has lower tax rates on the rich through a tax reform process. 

Which is just to say that all that's happening here is that Alan Simpson and Erskine Bowles have a different judgment about what kind of spending cuts and tax hikes the country should have relative to current law. That's fine. People should debate these issues. But that disagreement has literally nothing to do with the size of the budget deficit, which is projected to fall substantially if we do nothing.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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