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With the latest exchange of offers, President Obama and House Speaker Boehner have moved closer to a deal that would reduce the deficit by about $2 trillion over the next decade.  On the surface, the split between spending cuts and tax increases seems relatively even and this is likely to be a point of resistance for those who argue for greater spending cuts.  Lost in the rhetoric, however, is that some policies traditionally defined as “tax increases” are really “spending cuts.”

If that fact could be acknowledged by both sides, they might find that bridging the gap is an easier task.

The current tax code is riddled with "tax expenditures" -- exemptions, deductions, credits, exclusions and preferential rates that function much like entitlement spending.

At a recent public forum convened by Strengthening of America – Our Children’s Future, former Treasury Secretary Larry Summers explained, "There are long-standing privileges in the tax code that perhaps should be thought of as misguided entitlements and...reform of entitlements should also extend to the tax entitlements that benefit many of those who are best off. If we take that approach and we recognize that the idea of expenditure, like the idea of entitlement, is a notion that applies both to what has traditionally been the spending side of...

At last week’s 105th annual conference of the National Tax Association in Providence, R.I., former Clinton Treasury secretary and Obama economic advisor Lawrence Summers explained that the tax reform needed today is very different from the Tax Reform Act of 1986.
 
"It seems to me that the tax community will fail the broader economic community if, at this crucial juncture that lies ahead over the next several years, it remains entirely preoccupied with its most traditional concerns," Summers said at the conference, which I attended. "There are a number of aspects about the current context that stand out as quite unique -- very different from where the world was in 1986 and at most other moments when tax reform has been a prominent area of work." Summers sorted these differences into four factors:
 
(1)    Now our economy is constrained on the demand side, operating below its full productive capacity so that we are looking for policies that can quickly boost the aggregate level of economic activity. That is in contrast to the full-employment economy of the mid-1980s, when the focus was mainly on improving efficiency in the allocation of economic activity to promote more longer-term, supply-side growth.

(2)    In recent years, the income...

Example isn’t the main thing in influencing others – it is the only thing. – Albert Schweitzer

Increasingly alarmed by the nation’s deteriorating fiscal outlook and the failure of our political system to produce timely, common sense solutions, some state officials have begun to show leadership. They can do much more.

This year, the United States Conference of Mayors and the two leading associations of state legislators issued compelling resolutions that urge action by their federal counterparts. 

In September the mayors called for “a bipartisan and balanced approach to deficit reduction by incorporating spending cuts with additional revenue from sources such as tax code reform and closing unfair corporate tax loopholes.” In October the mayors reiterated their call for “a balanced plan for recovery that has the potential to restore the confidence of our people, and the world, in the leadership of our national government.”

The bipartisan Council of State Governments-West unanimously passed a resolution at its annual meeting in July urging Congress “...

This is Part II of a two-part series of posts on the presidential candidates' fiscal policies. Part I examines Governor Romney's plans.

The first part of this blog post series looked at the unanswered questions in Governor Romney’s overall fiscal policy, tax reform plans and health care reform plans. This second part will look at President Obama’s budget plans in addition to some areas of uncertainty.

Simply by virtue of being the President, with the requirement to submit an annual budget, Obama has had to provide more details about his fiscal plans. Yet, what those details clearly show is an inadequate long-term fiscal goal. Over ten years, federal debt held by the public would only stabilize temporarily, and at a higher level than it is today.

To the President’s credit, he supports negotiating a long-term, bipartisan “grand bargain” on fiscal issues with both spending cuts and new revenues. Yet, such explicit support has come only after his initial tepid reaction to the Simpson-Bowles report when it was released. Nevertheless, if Obama is re-elected, the upcoming...