Gridlock Strategies

One of the abiding themes of the political battles of 2012 was the realization that the impending expiration of the Bush tax cuts at the end of the year provided Democrats with an important bit of leverage: if nothing happened, taxes would go up, the deficit “crisis” would abate, and then Democrats would be in a position of supporting tax cuts in mitigating the impact on lower-and-middle-income families.

So the end of the year came and went, the “fiscal cliff” deal happened, and Obama and Democrats won a small but satisfying victory. But the “leverage” of inaction producing more revenues was gone, right?

Not exactly. As NYU’s David Kamin explains in the March-April issue of the Washington Monthly, there are two other ways in which revenues may well automatically increase in coming years if “nothing happens” to break the current partisan gridlock in D.C. One is the natural “bracket creep” that will be exacerbated if income equality continues to grow. The other is Obamacare’s tax on “Cadillac” health care plans, which will gradually act to reduce the tax subsidy on employer-based health insurance.

Combine these two ingredients of current law and slowly simmer them over time, and you’ve got some serious deficit reduction:

Taken together, this “automatic” revenue growth would reduce the long-term deficit, as projected by the CBO, by roughly one-third over the next seventy-five years. Again, that’s with no congressional action whatsoever. Moreover, it’s based on what’s probably too pessimistic a scenario that, among other things, assumes no ramp-down in the wars abroad, a return to higher historical levels of both defense and nondefense annual appropriations, and a partial repeal of Obamacare’s controls on health spending.

Kamin doesn’t consider these slow-but-steady revenue raisers a game-changer, but does think it’s a strategic asset progressives need to remember and use if, as may unfortunately be the case, they do not gain complete control of the federal government and the GOP “fever” does not break.

Read the whole thing.

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Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.