Tax Analysts Blog

Cantor Rejects Most of Bowles-Simpson

Posted on Oct 26, 2012

As Richard Kogan at CBPP recently pointed out in an eye-opening paper, the Bowles-Simpson plan does not work as advertised with $4 trillion of total deficit reduction of which only $1 trillion takes the form of tax hikes. The reality is Bowles-Simpson assumes (1) that the Bush tax cuts are not extended for families with incomes over $250,000 and (2) tax reform raises over $1 trillion in revenue: a total of more than $2 trillion in tax hikes. This is totally unacceptable to House Republicans, as House Majority Leader Eric Cantor explains in a recently released powerpoint presentation. It is a well-produced and extremely clear presentation that everyone--even those who don't agree with Mr. Cantor's positions--should take five minutes to view.

Read Comments (1)

AMT buffNov 4, 2012

Yes, it's the old baseline game: Pick a baseline that's already halfway to your
goal and offer to split the remaining difference.

Personally I don't share Cantor's objection to revenues reaching 21 percent of
GDP. My objection is that without structural changes to health care benefits,
which were completely omitted from Bowles-Simpson, 21 percent will become a
floor rather than a ceiling. Structural reform which includes higher
co-payments and other financial incentives to consumers must precede revenue
increases of any kind, including tax reform.

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