At the request of the Peter G. Peterson Foundation, six think tanks produced long-term debt plans that they unveiled at today’s Fiscal Summit. Conn Carroll notes that, with the exception of the plans from the conservative Heritage Foundation and American Enterprise Institute, each includes plans for tax revenues well above the historical record highs.
According to the Tax Policy Center, taxes have only risen above 20% of gross domestic product (GDP) twice in U.S. history: to 20.9% at the tale end of World War II (1944) and to 20.6% right before the tech bubble burst (2000). The average tax burden since 1981 has been 18% of GDP.
All four of the liberal budgets blow way past the 20.9% high-tax record. CAP hikes taxes to 23.8% of GDP, BPC to 23.1%, Roosevelt to 22.9%, and EPI to 24.1%.
Carroll also mentions that both the AEI and Heritage plans call for a Ryan plan-style premium support model for reforming Medicare. As a sample of one of the liberal plans, the Center for American Progress [CAP] plan leaves restraining Medicare spending up to the Independent Payment Advisory Board, or IPAB, which would also be empowered to cut overall health care spending if necessary. CAP would also cut defense spending, increase the top income tax rate to where it was in the Clinton years, raise the capital gains tax rate, and impose a 5 percent surtax on people earning over $1 million. Additionally, CAP would institute a carbon tax, hike payroll taxes on the wealthy, close tax loopholes, and raise the estate tax.
While none of the proposed plans is even close to politically viable in the near term, the excercise is useful because the differences between the liberal and conservative strategies illustrates the philiosophical gap in the conception of the role of government.