With the congressional “supercommittee” unable to agree on a deal to cut the deficit, the theme of this morning’s coverage was all about partisan gridlock preventing our nation’s leaders from coming together to solve common problems. Even members of Congress were embracing that frame: The Washington Post’s story on the supercommittee’s failure ended with John Kerry saying that “the real threat” is that “the political confusion and gridlock is enough to say to the world: America can’t get its act together.”
There’s something to that. But the emphasis on conflict obscures another, equally plausible story line: that bipartisan consensus is one of the sources of America’s budget difficulties.
The consensus in question has to do with the Bush-era tax cuts, which are scheduled by law to expire at the end of next year and which, as a follow-up story in the Post notes, are now likely to have a starring role in the 2012 campaign. Many pixels have been spent rehashing endless iterations of the partisan conflict over the cuts: Democrats want to let marginal rates for income above $250,000 revert to Clinton-era levels. Republican’s don’t. Democrats say they’re willing to entertain cuts in entitlement programs if Republicans budge. Republicans still say no.
But while the parties have the same fight over and over on the top-end tax cuts, they basically agree that the so-called “middle-class” portion of the Bush tax cuts should be preserved; President Obama has said many times, going back to the 2008 campaign, that he doesn’t want to raise taxes on households earning less than $250,000. (Why “so-called”? First, because there seems to be no agreement on what the term means; some influential Democrats argue even people earning $250,000 or $300,000 “are not rich.” Second, because high-income households see substantial benefits—much larger, in dollar terms, than moderate-income families—from the “middle-class” cuts.)
This has big consequences for the budget deficit because, it turns out, the “middle-class” tax cuts actually cost the government a lot more revenue than do the cuts that exclusively benefit the wealthy. According to The New York Times’s nifty interactive budget calculator, allowing the lower rates on income above $250,000 to expire would generate $54 billion in tax revenue in 2015, while allowing rates to rise for income below that level would produce $172 billion—more than three times as much.
This dynamic—in which the “middle-class” cuts are taken as settled fact, though they’re not yet settled as law—creates some strange language and logic around the budget talks, as Matthew Yglesias noted today in his inaugural Slate column. “If the supercommittee ‘succeeded,’” he wrote, “it would have meant compromising between Obama’s large tax cut and the GOP’s humongous tax cut, and then agreeing to count it as a tax increase.”
Now, there are obviously many different ways to close the deficit, and the bipartisan consensus here may mean that retaining the “middle-class” cuts is the right, or at least the politically representative, policy. And, in any case, it’s not the responsibility of straight news stories to plump for any particular solution to the deficit problem.
It is the responsibility of those stories, though, to explain what the roots of that problem are. In this case, that means noting that bipartisan consensus—that elusive thing, newsworthy only when it’s out of reach—is part of the story.