Rep. Chris Van Hollen and Sen. Chuck Schumer tallied up what amounted to a list of demands from Democrats on revenue in the debt limit negotiations. They are a collection of real but pretty mild steps.
In a conference call with reporters, Van Hollen, a member of the debt limit talks, listed three ideas in particular. Democrats wanted to end tax subsidies for oil companies, something they have discussed consistently for the past few months. They also wanted to cut a tax break that favors depreciation for tax purposes for corporate jets over commercial airplanes. Finally, they wanted to limit deductions for people making over $500,000 a year. In his initial budget and also as part of the health care negotiations, the Obama Administration brought up capping deductions for people making over $250,000, which could actually have a major revenue impact – as much as $300 billion over 10 years (incidentally, it was Charlie Rangel, then-Chair of the House Ways and Means Committee, who killed that idea). This proposal would have a lesser impact because the cap has been raised to $500,000. There would also be greater latitude for deductions among lower-income earners.
So with the deductions cap whittled down, and oil subsidies not being a huge number, I don’t see these solutions adding up to much more than $150-$200 billion. Remember, according to Eric Cantor $2 trillion in spending cuts had been agreed to. Now, this may not be the only three options on the table; Democrats could have offered other closings of tax loopholes, and the like. But even in a best-case scenario, you’re talking about a grossly lopsided deal.
Anyway, it’s all academic, according to Van Hollen. “The message Republicans sent was…unless we accept their lopsided approach, they’re prepared to tank the economy.” Compromise is out the window. Or at least that’s the statement in public.
Schumer was adamant that revenues need to be a part of any deal. But if the revenues are a token in a deal mainly composed of spending cuts, it’s going to be hard to swallow all the happy talk about what a hard bargain Democrats drove in the end. Perhaps gridlock, the expiration of the Bush tax cuts, and merely ordering debt repayment is the better option.