House Speaker John Boehner laid out the GOP's alternative to the Democrats' jobs plan Thursday—a proposal which emphasizes lowering and simplifying tax rates, sweeping away federal regulations, and opposing tax increases. None of it was new ground. Many of the key lines, such as his claim that small businesses have "been slammed by uncertainty from the constant threat of new taxes, out-of-control spending, and unnecessary regulation from a government that is always micromanaging, meddling, and manipulating," will sound familiar to anyone who has followed the political discourse over the past year. But his call that the so-called super committee, which must identify $1.5 trillion in debt savings as part of this summer's debt limit package, also tackle comprehensive reform of the income and corporate tax codes may put more heat on that body to broaden its focus. However there aren't a lot of reasons to have optimism in its chances to resolve this sticky issue.
To be sure, some of the super-committee members have spoken in favor of tax reform. "Comprehensive tax reform would spur economic growth and job creation, and should be a part of our discussions," Michigan Republican Rep. Dave Camp, a super committee member and chairman of the House Ways and Means Committee, said during the committee's opening meeting last week. "I think we have a shot at this," South Carolina Democratic Rep. Jim Clyburn told MSNBC Thursday, speaking of reforms to flatten and simplify the income tax code.
But the battle lines being drawn are familiar to anyone who followed the debt ceiling fight over the summer. Republicans are against raising taxes, while Democrats oppose a cuts-only approach to deficit reduction. Democrats view tax reform as a way to free up new government revenue that has been chipped away with various tax breaks over the decades, while Republicans view it as a chance to lower the nation's tax rates with a simpler structure. In his speech, Boehner continued to blast tax hikes, throwing cold water on any idea that the GOP might be softening. "It's a very simple equation," Boehner said. "Tax increases destroy jobs. And the joint committee is a jobs committee. Its mission is to reduce the deficit that is threatening job creation in our country." Neither side budged much during the summer's budget fight, and there isn't any particular reason to assume that the super committee will be any better at resolving the issue, especially because anything approved by the super committee will also have to be approved by both chambers of Congress before it becomes law.
Tax reform as a way to boost revenue is a crucial part of Obama's jobs plan, which the GOP is girding itself to oppose. While it's possible that the two parties are moving towards common ground—Boehner and other Republicans have been made surprisingly conciliatory noises lately about Obama's ideas, often claiming they have merit—Boehner's speech today sent a clear message: We're still against tax hikes. Unless it unlocks new revenue, tax reform would be an extra task for the super committee, which already has plenty on its plate. And, as Boehner acknowledged in his speech, the Nov. 23 deadline is likely too soon to do the kind of work you'd need to truly tackle all of the complex tax breaks and incentives. In 1986, the last time Congress truly reformed the tax code, it spent months wrangling over the issues. Boehner suggested that the super committee might be able to "lay the groundwork" for tax reform, and that's true—but the prospect of the super-committee passing off a task to yet another committee will no doubt be ridiculed.
Boehner's argument, that economic growth is being held back by a stifling tax code and by burdensome regulations, is controversial among academics, naturally. While economists agree that a simpler system would likely make businesses more efficient, not all agree that it's the biggest problem facing this economy. "Firms have a lot of cash on hand, it's not like they're hurting for money to be spent," says Tara Sinclair, and economics professor at George Washington University. "A revenue-neutral adjustment, I really don't see that it's going to have much of a stimulative effect."
Many in Washington are hoping that this could turn into one of those "stars are aligned" moments, when a political groundswell leads to a historic piece of legislation. But lately in Washington, those hopes have been dashed by stubborn partisanship. The signs aren't good that this time will be any different.