December 4, 2012
On initial examination, the House Republicans’ counter-offer to address the looming “fiscal cliff” tax hikes and spending cuts “appears little more than categorical, preemptive capitulation,” Heritage Foundation experts Alison Fraser and J.D. Foster argue.
First, the proposal fails to address the real source of our nation’s fiscal crisis: massive overspending, especially on rapidly-expanding entitlement programs like Medicare, Medicaid and Social Security.
“Beyond disappointing, the House Republican counteroffer appears at best to suggest incremental tweaks to these programs,” Fraser and Foster write. “Without real entitlement reform—not just spending cuts—we will never fix the underlying problem.”
Second, the program includes:
An anti-tax reform program of reductions in the availability of certain deductions and exemptions—without offsetting reductions in rates. While preferable in general to raising tax rates, this proposal largely dooms future efforts at tax reform based on the sound principle of broadening the tax base to lower the rates. Instead, this proposal would broaden the base, not to lower rates, but to raise revenues. So much for improved economic growth.
While the GOP plan does profess its continued support for the principled budget the House passed this year, Fraser and Foster deem it “a dud. It is utterly unacceptable. It is bad policy, bad economics, and, if we may say so, highly questionable as a negotiating tactic.”
Tell us in the comments: What do you think of the Republican fiscal cliff proposal?