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Simpson-Bowles: The Conventional Wisdom Is Correct

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Matt claims that the Catfood Commission “is more left-wing than you know.” Among the people who would be surprised by this claim is…Matt Yglesias circa 2010, who (correctly) noted that the commission was designed to be heavily tilted towards conservative priorities with predictable results. So is Yglesias 2012 right? Here’s the meat of his argument:

The key point is that while people say Simpson-Bowles features a 3-1 ratio of spending cuts to tax increases, it does this from a baseline that assumes full expiration of the Bush tax cuts.

When Barack Obama puts forward a 3-1 plan, the partial expiration of the Bush tax cuts that he favors is part of his one. Simpson-Bowles is taking a bigger tax hike than that, counting it as baked in the cake, and then implementing tax hikes on top of that. What’s more, Simpson-Bowles also implements steeper defense cuts than Obama has proposed.

The defense cuts point is indeed one of the few good things in the report, as I think was widely acknowledged at the time. But the key point here is the one about taxes. And unfortunately for Yglesias 2012, this is erroneous — S/B assumes that the Bush tax cuts on people making $250,000+ will expire. Obama’s proposal, in other words. (The Suzy Khimm post the argument is based on has been corrected to reflect this.) The contrarian argument can’t be sustained without this premise.

And, of course, from there things get worse for Yglesias 2012. Obama actually wants to retain the Clinton-era rates on high earners, while Simpson/Bowles want to cut the top marginal rate to 23%, or far lower than even the Bush tax cuts. And then there’s the arbitrary revenue and caps and unnecessary cuts to discretionary spending. (I’m pretty confident Hollande’s “left-wing austerity” doesn’t involve capping spending at a level that would force massive welfare spending cuts in order to fund upper-class tax cuts.) And then there’s the problem that “grand bargains” are cons in which liberals are the intended (and, when agreed to, actual) suckers.

Yglesias 2010 had it right — liberals don’t like the Catfood Commission because it’s a reactionary set of policy proposals.  It’s not a “devious” plan to gut the welfare state; it’s an explicit one.

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