May 04, 2011
Today in the Washington Post, Steven Pearlstein rather authoritatively sets out his preferred plan for a budget agreement, claiming:
If you locked 100 Americans in a room with a team of technical budget experts and told them they couldn’t leave until 60 of them could agree on a budget plan, this is what would emerge.
Hmm… that rings a bell. Has anyone brought a cross-section of Americans to meet with experts and wrangled a plan out of them?
Why yes! AmericaSpeaks brought together 3,500 Americans at sites around the country to discuss the nation’s budget last June. Participants heard from sitting members of Congress and experts via webcast “to create a true National Town Meeting.” They looked at spending and tax options to reduce the deficit and worked in small facilitated groups “to learn about the issues, weigh trade offs, and express their preferences.”
Despite plenty of misgivings from CEPR and others about these meetings being funded by the infamous deficit hawk Pete Peterson — and therefore these budget exercises being played with a stacked deck — the AmericaSpeaks participants chose items that come pretty close to what opinion polls have shown are popular with the public.
And their preferred options mostly differ from those highlighted in the Pearlstein plan. Here are some comparisons:
Pearlstein:
Social Security will be returned to long-term actuarial balance through a combination of progressive reductions to the cost-of-living formula, increases in the cap on income subject to the payroll tax and very gradual increases in the retirement age.
AmericaSpeaks participants:
No option to reduce Social Security benefits received support from a majority of participants. Raising the full retirement age received support from 39%, and lowering the cost-of-living formula (a.k.a. the measurement of inflation) was supported by only 24%.
Pearlstein:
On taxes, the top marginal earned rate of 35 percent will be left in place, but limits on deductions will increase revenue from taxpayers who itemize.
AmericaSpeaks participants:
54% supported an extra 5% tax on those earning more than $1 million a year, and 52% supported raising income tax rates for the top two tax brackets. Limiting the value of personal income itemized deductions received support from at most 37%.
Pearlstein:
The corporate rate will be reduced to 25 percent, and then only for profit earned in the United States, but elimination of deductions and loopholes will raise more money for the government, not less.
AmericaSpeaks participants:
44% supported raising the top corporate income tax rate to 40% from 35%, making it the 2nd most popular tax choice after the millionaire’s tax.
Pearlstein:
No mention of a financial speculation tax, and no specific mention of defense cuts.
AmericaSpeaks participants:
50% supported a securities transaction tax (a.k.a. a financial speculation tax). 85% of participants supported at least a 5% cut in defense spending, and 51% supported a 15% cut.
In fairness, there are a few items that Pearlstein and the AmericaSpeaks participants agree on: raising the cap on Social Security payroll taxes, reducing “other spending,” and establishing a carbon tax.
Mr. Pearlstein claims that his plan would emerge from his locked room of Americans, “Not because it is necessarily anyone’s ideal plan but because it is least objectionable to the largest number of people. It represents the political center of gravity.”
What does he base this claim on? Not the most recent opinion polls. And not the closest thing to his locked room, the AmericaSpeaks meetings.
Well, he states that the “intelligence” work was done most recently by “the bipartisan deficit commission.” That’s the commission that didn’t even vote on a final report because it couldn’t get enough agreement to be able to report out.
If Mr. Pearlstein wants to put forth his own budget plan, he’s got every right to do so. But claiming that it’s what the American people want seems downright disingenuous.
