Sharp analysis from our friends at Bretton Woods Research.
A group of six senators (Durbin, Conrad, Warner, Coburn, Crapo & Chambliss) proposed to Democratic leaders yesterday legislation that would automatically raise taxes and cut spending should certain deficit reduction targets not be met. The negotiations are in their very early stages, and the specifics have yet to be fully discussed with Congressional leaders. But we are disappointed that this "pay-go" type of legislation was not immediately shot down by Republican leaders.
Reportedly, more than 40 Senators have shown interest. Meanwhile, Republican aides suggested yesterday that the only thing necessary for House Republicans to go along with the Senate's push would be for President Obama to publicly embrace the effort. While we don't think such legislation is a real possibility, these negotiations are another example of the absence in Congress today of pro-growth, revenue-raising ideas. Instead of bad ideas like this plan, Boehner and McConnell should be leading their caucuses by discussing cuts in capital gains and corporate income taxes to increase the economic incentives to produce and create jobs.
As Jude Wanniski said 25 years ago, there is something in Republicans' DNA that drives them crazy during recessions when they see unbalanced budgets.
Deficit Plan Details Emerge Bipartisan Senate Group Mulls Spending Caps That Could Trigger Tax Increases