WASHINGTON – The Concord Coalition today said the high cost of this week’s legislative agreement between the White House and Republicans can only be justified if it is promptly followed by enactment of a substantial deficit-reduction plan that would take effect as the economy recovers.
That conclusion came in an analysis that Concord released today of the agreement that the White House negotiated this week with Republicans in Congress to extend the Bush-era tax cuts, continue unemployment benefits and make a variety of other changes in current tax law. The full analysis can be found on Concord’s website at http://concordcoalition.org/issue-briefs/2010/1211/tax-cut-deal-risks-and-opportunities .
“With the impending expiration of tax cuts and emergency unemployment benefits having already run out,” Concord said, “action must be taken on those items more swiftly than would be ideal, to prevent damage to the fragile economic recovery. However, there can still be conditions or commitments set along with this agreement that would pave the way for a fiscally prudent set of reforms. The existence and credibility of any such initiatives will be crucial in making a final judgment on the agreement.”
Concord noted the temporary nature of the proposed extension of the 2001 and 2003 tax cuts as a positive. But it warned that without tax reform, there would be strong political pressure in a presidential election year to enact another deficit-financed extension.
The proposed “payroll tax holiday” next year, while it would also increase the deficit, offers a greater bang-for-the-buck in stimulating the sluggish economy than extending the 2001 and 2003 tax rate cuts.
Concord also reiterated its call for elected officials to put a high priority on approving a comprehensive reform plan to make the tax code simpler, more fair and more efficient. The President’s National Commission on Fiscal Responsibility and Reform recently recommended such reforms.
“The outpouring of credible plans from partisans and policy wonks in response to the work of the President's commission,” Concord said, “has made clear that nearly everyone in Washington longs to fundamentally transform the tax code -- making it the most sensible area for the nation's leaders to immediately begin our long march towards responsible budget policy.”
The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Former U.S. Senators Warren B. Rudman (R-NH) and Bob Kerrey (D-NE) serve as Concord's co-chairs and former Secretary of Commerce Peter G. Peterson serves as president.