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...