Boehner Speaks on Deficits and Taxes

House Republican Leader John Boehner (R-OH) gave an economic speech today that was billed as setting the policy table if Republicans gain control of the House in November. If so, the table needs some more place settings.

The speech got headlines because Boehner blasted the policies of the Obama administration and called for Treasury Secretary Tim Geithner and National Economic Council Director Larry Summers to resign. But the address also touched on fiscal issues; illustrating why it is so hard for policymakers to address the debt but also offering a glimmer of hope for some progress.

Boehner hammered at Obama and Democrats over “irrational” federal spending, calling to return non-defense discretionary spending to 2008 levels. He said with Republicans in charge, they would do things different and confront the national debt.

Listen, we need to have an honest conversation with the American people about the scope of our fiscal challenges – that means everything from short-term commitments to long-term commitments.

Sounds great, but then he ensures the conversation will be one-sided by taking the 2001/2003 tax cuts off the table, saying if they aren’t all permanently extended, it will be a “jobs-killing” tax increase. This unwillingness to consider all options is a key reason why Washington has yet to come close to developing a serious plan for putting the country on a sustainable fiscal course. The lack of direction is reflected in a recent poll underscoring that Americans are split over extending the tax cuts for the wealthy or just the middle class – with voters professing to support deficit reduction at the same time. A truly open and honest conversation on the fiscal situation and how to fix it must include both spending and revenues.

Yet Boehner does provide an opening for bipartisan agreement when he turns to tax expenditures – the myriad of targeted tax breaks in the tax code.

We need to take a long and hard look at the undergrowth of deductions, credits, and special carveouts that our tax code has become.

And, yes, we need to acknowledge that what Washington sometimes calls ‘tax cuts’ are really just poorly disguised spending programs that expand the role of government in the lives of individuals and employers.

It was the late Jack Kemp who said, ‘not all tax cuts are created equal.’ We need to bring simplicity and certainty to our tax code so we can make it a vehicle for sustainable pro-growth policies, not transfer payments to the favored few.

This call for tax reform and serious examination of tax expenditures that are usually extended without any review is very encouraging and welcome. Fundamental tax reform can play an important role in improving the fiscal outlook, but in addition to simplifying the tax code reform must also broaden the tax base in order to be effective. Resistance to any increases in revenues will make real reform impossible.

Boehner called for a “fresh start” in the speech. Putting everything on the table in order to encourage sensible solutions to our fiscal problems would be something fresh and useful.