NY Times: G.O.P. on Defensive as Analysts Question Party's Fiscal Policy

Wanted to be sure you saw this NY Times article highlighting Republican economists’ support for a balanced approach to deficit reduction that includes both spending cuts and revenues. We hope Republicans will take note, stop “insist[ing] that taxes will not be on the table for the bipartisan Congressional committee,” and work with Democrats on a balanced plan to reduce the deficit, strengthen the solvency of our entitlements and help support job creation.

Key excerpts:

“The boasts of Congressional Republicans about their cost-cutting victories are ringing hollow to some well-known economists, financial analysts and corporate leaders, including some Republicans, who are expressing increasing alarm over Washington’s new austerity and antitax orthodoxy.”

“Their critiques have grown sharper since last week, when President Obama signed his deficit reduction deal with Republicans and, a few days later, when Standard & Poor’s downgraded the credit rating of the United States.”

“But even before that, macroeconomists and private sector forecasters were warning that the direction in which the new House Republican majority had pushed the White House and Congress this year — for immediate spending cuts, no further stimulus measures and no tax increases, ever — was wrong for addressing the nation’s two main ills, a weak economy now and projections of unsustainably high federal debt in coming years.”

“Among those calling for a mix of cuts and revenue are onetime standard-bearers of Republican economic philosophy like Martin Feldstein, an adviser to President Ronald Reagan, and Henry M. Paulson Jr., Treasury secretary to President George W. Bush, underscoring the deepening divide between party establishment figures and the Tea Party-inspired Republicans in Congress and running for the White House.”

“As for the longer term, Ethan Harris, co-head of global economics research at Bank of America, wrote this week that ‘Given the scale of the debt problem, a credible plan requires both revenue enhancement measures and entitlement reform. Washington’s recent debt deal did not include either.’”

“That is a common assessment, which may explain why Representative Eric Cantor, the House majority leader, was defensive about Republicans’ antitax absolutism in a memo to his colleagues on Monday.”

“But Mr. Feldstein, who was chairman of President Reagan’s Council of Economic Advisers, was among the first in 2008 to call for stimulus spending and recently has advocated raising revenue. He would do so by limiting ‘tax expenditures,’ the costly tax breaks for corporations and individuals that include the mortgage-interest deduction — an idea recommended in December by a majority of Mr. Obama’s fiscal commission and lately by the president.”

“‘I think Republicans should recognize that is a way of raising revenue without hurting incentives by higher marginal tax rates,’ Mr. Feldstein said.”

“Yet Republicans insist that taxes will not be on the table for the bipartisan Congressional committee created by the deficit deal. The panel must propose additional savings by Nov. 23 to fulfill the deal’s promise of up to $2.4 trillion in savings over 10 years.”