Proposals to avert the fiscal cliff shouldn't increase poverty or inequality or slow the economic recovery. Those simple common-sense principles appear to be gaining increasing visibility and support, which is the best news this morning.
Turning to less good news: with President Obama having offered a plan last Thursday, Republicans in Congress are beginning to articulate their own preferences. It is good that a plan is emerging. What's not so good, as Josh Barro notes, is that what passes for a plan in the House has few details but many problems. To wit, this "plan" is not really a plan: when you make common-sense assumptions about the details of the proposed tax reforms, the numbers don't add up, and the cuts required would slow the economy.
In other news, Pennsylvania Senator Pat Toomey has acknowledged that he is willing to entertain higher taxes on wealthy households. Unfortunately, in exchange he is pushing hard for larger cuts in spending on Medicare and Social Security.
- Tracie Mauriello, Pittsburgh Post-Gazette — Toomey modifies his plan to include tax hikes on rich:
"We're running out of time and this is a reasonable compromise based on the same principles of all the bipartisan commissions" that have drafted proposals to the fiscal crisis, [Toomey spokeswoman Nachama Soloveichik] said.
Her boss's proposal calls for $750 billion in cuts — mostly to Medicare and Medicaid — along with $500 billion in new revenue from eliminating loopholes.
Jonathan Tamari reports this morning that Pennsylvania Senator Bob Casey is focusing his efforts this week on short-term measures to boost the economy. Extending the payroll tax credit along with an unemployment insurance extension would constitute a good first step. We would also like to see some additional spending beyond those extensions on things like new infrastructure in order to generate some additional job growth over the next two years.
- Jonathan Tamari, The Philadelphia Inquirer — Senator Bob Casey moves to extend payroll tax cut
Calling the two-year-old tax break a "proven strategy that we know creates jobs," Casey argued in an interview Monday that keeping the payroll tax rate at 4.2 percent instead of 6.2 for another year would put money into workers' pockets, encourage consumer spending, and boost the economy.
More than half the benefits of the cut go to those earning less than $100,000, the fact sheet says, underscoring the help it provides middle-class workers, Casey said.
"They're the ones that drive the consumer spending that keeps the economy growing," he said, adding that "it makes good sense" to continue the tax break.