In a month, if White House officials are to be believed, the Obama Administration will unveil the tax reform report of the President’s Economic Recovery Advisory Board. Despite once-high expectations, it is likely to be a waste of everyone’s time.
The Board (the PERAB in Washington-speak) is hardly a bunch of economic lightweights. Chaired by ex-Federal Reserve Chairman Paul Volcker, its members include economist Marty Feldstein, GE CEO Jeff Immelt, venture capitalist John Doerr, former CEA chair Laura Tyson, and other stars of Wall Street, Main Street, academia, and labor. Its chief economist is Austan Goolsbee, a top-notch researcher who has had close ties to President Obama for years.
Yet the reform panel—technically a PERAB subcommittee-- is going to produce…a mouse. From its earliest days, the group was forced to work under impossible constraints. Chief among them: Obama’s insistence that no one earning less than $250,000 should pay higher taxes. Exempting more than 95 percent of families and individuals from tax hikes of any kind essentially shut the door on any serious discussion of reform, which inevitably creates winners and, yes, losers.
Once individual taxes were taken off the table, the panel was charged to look at corporate tax reform, enforcement issues, and simplification. But even on those limited topics, the panel will make no recommendations. A few months ago, we were told it would produce a document that looks something like CBO’s revenue options—listing a narrow range of ideas without actually endorsing any of them.
Now, we learn, the panel may not even do that. Rather, it will merely enumerate possible ways to simplify, improve enforcement, or restructure the corporate tax without even hinting which the Administration favors and which it does not. Other than serving the need to produce something, I can’t imagine why they are even bothering.
It has been abundantly clear since the campaign that Barack Obama has little interest in tax reform. Not to begrudge him, he does have more than enough on his plate without it. And I understand that not everyone shares my fascination with the tax code.
On the other hand, there is that matter of a $1.4 trillion deficit and an income tax that is crumbling under its own weight. Obama is surrounded by economic advisors who understand better than I that reforming the way government collects revenue is both necessary and inevitable. Apparently, their views have been drowned out by his political advisers who, I assume, see the whole issue as a swamp.
So why did the White even bother with a commission such as this? It is not as if anyone was demanding one. And Volcker, Goolsbee et al have better things to do than make lists.
