Hoyer says 'tax expenditures' must be part of deficit solution

House Minority Whip Steny Hoyer (D-Md.) on Wednesday argued that Congress should eliminate the $1.1 trillion in tax "loopholes and preferences" as a way of reducing the deficit because focusing only on spending cuts to discretionary spending will require cuts that go too deep for people who rely on these discretionary programs.

"Our tax code is a monumental collection of rules and regulations, riddled with loopholes and preferences which are a drain on job creation and frankly exacerbate the deficit," Hoyer said on the floor. Hoyer said these so-called "tax expenditures" exact a high price on U.S. productivity because businesses and families spend millions of hours working to minimize their taxes. He said ending these tax breaks and imposing lower tax rates overall would be more efficient.

"Closing those loopholes in return for lower tax rates frees us all to make more economically sensible choices," he said. "In other words, less preferences, lower rates." Hoyer did not specify how much of the $1.1 trillion in current tax preferences might be collected by the government once lower overall rates are in place.

Republicans have so far ignored Democratic requests to broaden their focus on FY 2011 spending cuts beyond discretionary non-security spending, but have pledged to do so when the FY 2012 is taken up.

The possibility of changes to the tax code is also unclear. Some Republicans have proposed a flat tax, but many tax analysts expect that eliminating various tax preferences, such as the home mortgage interest deduction, would prove controversial.