America Dodges a Super-Tax-Hike as Super-Committee Collapses

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Didn’t our Democratic friends always intend to derail the super-committee over the top Bush tax rates?

You remember that $800 billion revenue number always floating around from the Democratic leaks? Well, that’s the static-revenue estimate of repealing the 35% and 33% Bush rates. Sometimes that Democratic revenue number moved up to $1.2 trillion. Well, that would include the static-revenue estimate of the 5.6% millionaire surtax. Get it?

In an important sense, the whole super-committee debate from the Democratic side was about taxing the rich. They never went quite as far as President Obama’s populist class-warfare rant, at least not publically. But basically this logjam was about so-called tax fairness.

Ironically, when the automatic spending cuts trigger in, Speaker Boehner will win out. His original vision — going back to the debt-ceiling debate last summer — was $1 in spending cuts for each $1 of debt increase. So the sequester will get $1.2 trillion in spending cuts on top of last summer’s $1 trillion.

No it’s not great. We should have done $4 trillion to $6 trillion by reforming entitlements and undergoing pro-growth tax reform for individuals and corporations. But at the end of the day, we dodged a super tax hike and got a couple trillion dollars of lower spending. Not the worst thing in the world.


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