More From the Soap Opera that is Washington

by Dennis Sanders on November 9, 2011

It looks like the GOP is finally breaking its “no tax increase” stand.  They are offering some revenue enhancements in the latest round of budget talks.  The Democratic response seems to be one big yawn.The Washington Post has the specifics:

The offer proposed to hit the panel’s $1.2 trillion target — and to save $1.5 trillion through 2021, counting reduced interest payments on the national debt — by cutting $700 billion in spending and raising about $600 billion in new revenue.The spending cuts would include $240 billion from agency budgets, about $275 billion from federal health programs and about $150 billion from using a less-generous measure of inflation in federal formulas, including the annual cost-of-living adjustment for Social Security, according to people with knowledge of the plan.

The new revenue would be split between outright tax increases and other forms of government income, including higher fees for an array of federal services, asset sales and higher Medicare premiums for well-off seniors — provisions that are more typically counted not as revenue but as income that helps to reduce spending.

The proposal included about $300 billion in actual tax increases, marking the first time Republicans offered to acquiesce to that key Democratic demand. The offer envisions a tax code rewrite that would lower rates for everyone while raising overall tax collections by $250 billion, mainly by limiting the value of itemized deductions such as write-offs for home mortgage interest.

In addition, the Republicans would raise about $40 billion by applying the new inflation index to the tax code, a move that would push people more rapidly into higher tax brackets.

Senior Republican aides described the proposal as a “significant concession” on taxes. But the tax increases would be offset by permanently extending the George W. Bush-era tax cuts past their 2012 expiration date, a move that would increase deficits by about $4 trillion over the next decade. In the past, Democrats have demanded at least $1 trillion in fresh revenue in exchange for extending the Bush tax cuts.

Is this a perfect plan?  Probably not.  But it is a big step for the GOP to talk about raising revenue even if they want to keep the Bush tax cuts.  The GOP has made some significant steps forward, not brave steps but important steps nevertheless.

Maybe sanity can come back to Washington after all.

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