Opinion: A win-win for all on tax reform

What a difference two years can make in a debt ceiling debate.

The country is expected once again to hit the debt ceiling later this year after the borrowing limit suspension expires on May 19.

ADVERTISEMENT
Two years ago House Republicans came to the brink of forcing a government shutdown during the debt ceiling fight. That led to the creation of a Super Committee on the budget. Its failure, in turn, led to the disaster now known as sequestration.

Now the Republicans are singing a new song: ‘Let’s Make a Deal.’

The deal that House Republicans want seeks reform of the tax code as their price for approval of a hike in the debt ceiling.

House Majority Whip Kevin McCarthy (R-Calif.) says his conference will “unite around tax reform” as part of a debt ceiling deal.

That means that the GOP’s erstwhile insistence on big cuts to entitlement spending is off the table.

Democrats have every reason to smile.

But the White House and Democrats in Congress are grumpy about making any deal tied to raising the debt ceiling. As a matter of principle, the Democrats insist that the debt ceiling should not be held hostage to other political demands.

They have a point. Hikes in the debt ceiling — without any political demands from the opposition party — had been routine until President Obama took office.

But holding the line this time would be a mistake. It is an invitation to more of the same old political gridlock that is paralyzing Congress and threatening the economy. It will also waste some of the precious time that remains for the president to make a real push for his legislative agenda.

It is time for creative thinking. It is time for a deal.

The politics of tax reform is good for both parties.

Americans tell pollsters they overwhelmingly want a simple, fair tax structure. According to an April Pew poll, the desire for a less complex, less time-consuming process with less paperwork is shared by 55 percent of Americans — a number which far outstrips the 12 percent whose prime complaint concerns how the government uses tax dollars and the five percent for whom the main problem is paying too much in taxes.

After last week’s White House news conference where the president was on the defensive about his power to advance his second term agenda, he and other Democrats cannot look this gift horse in the mouth. They need a win-win scenario.

Here it is:

The president wins because even after last week’s improved unemployment numbers, voters are focused on job creation. He is also on the record in support of tax reform — albeit as a general principle rather than in the shape of a specific proposal.

Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, is calling for tax reform legislation that eliminates the very exemptions and tax deductions that have been advocated by the president’s own fiscal commission.

Almost all of those deductions and exemptions would come out of the pockets of corporations and people making over $250,000 per year in order to protect the middle class against a tax increase.

That’s a win for the president.

The GOP also wins.

They get a concession from the president for raising the debt ceiling. They also avoid political culpability.

Two years ago, the GOP got most of the blame for the debt-ceiling crisis that shook the economy to its foundations.

And there is potentially more good news – for both sides — in a deal.

Such an accord is likely to generate political momentum for a “Grand Bargain” budget deal. Recall that in the president’s budget he offers to make changes long sought by the GOP to bend the spending curve for Social Security and Medicare, major drivers of entitlement spending.

This is exactly what House Budget Committee Chairman Paul Ryan (R-Wis.) has been asking the president to do – fix the “structural problems” that are at the core of the debt-ceiling issue.

Obama will be in a stronger position to highlight the concessions he is willing to make on entitlement spending if he has revenue in hand from tax reform. It also opens the door to government spending on job creation.

So far, Republicans have ignored concessions on entitlement spending in the president’s budget plan.

The major obstacle to tax reform from the right is Chairman Camp’s insistence that any deal be revenue neutral, offsetting any money gained from removing deductions and loopholes with lower tax rates.

But Senate Finance Committee Chairman Max Baucus (D-Mont.) is insisting a deal is possible that produces revenue to reduce the deficit.

For both sides, the political cost of failing to make a deal is to take the country back to 2011, when Standard and Poor’s downgraded the nation’s credit rating for the first time in history.

There is nothing to be gained by anyone in taking the country down that road again.

So, let’s make the deal.

Juan Williams is an author and political analyst for Fox News Channel.