Recent votes in the House show how difficult it will be to deal with our long-term deficit problem. Things are unlikely to get better anytime soon, writes James Kwak for the Atlantic.
There were two important budget votes in the House of Representatives last week. The one that got more attention was the near-party-line vote to pass the budget resolution produced by Representative Paul Ryan and the House Budget Committee. That budget cuts the top tax rate from 35 percent (Bush 2001) to 25 percent, maintains our current record-low tax rates on investment income, converts Medicare into a partial voucher program, makes enormous but unspecified cuts to discretionary spending, slashes Medicaid, and undoes last summer's deal to make automatic cuts in defense spending.
The more interesting vote, however, was the overwhelming bipartisan vote against the Simpson-Bowles deficit reduction plan that has been hailed by so many self-appointed centrists. Simpson-Bowles was the plan created by President Obama's bipartisan deficit commission in December 2010. It also cut tax rates, but spelled out how it would increase revenues by eliminating tax expenditures. It proposed an arbitrary cap on growth in federal health care spending; and it slashed defense and non-defense discretionary spending in equal measure.
I'm no fan of Simpson-Bowles for several reasons, the first being that a long-term debt crisis should not be used as an excuse to cut tax rates. But its crushing defeat should serve as a clear reminder of the political hurdles facing any kind of deficit solution.