Sen. Mark Warner (D-VA) is offering a new compromise take on the Bush tax cuts. In a nutshell, the moderate Senator says Congress should hew to the President’s plan to end tax cuts for the top 2% of earners — but instead of using the new revenue to pay down the deficit as President Obama has suggested, Warner says it should be used to pay for new tax cuts aimed at boosting the economic activity of businesses.
Here’s Warner’s plan, as he laid it out in a Financial Times op-ed today:
Instead the administration should consider an alternative compromise. Extend the tax cuts just for 98 per cent, allowing the cuts for top wage earners to expire as scheduled. But instead of removing $65bn from the economy, we should work with the business community to enact $65bn in new, targeted business tax cuts and incentives to spur private-sector investment.
Warner says his proposal checks all the boxes. But with leaders on both sides of the “no compromise” line digging in, does it have much of a chance?
First, more on the plan. “The logic of this proposal is clear,” Warner writes. Basically, Warner would take the new revenue created by extending the cuts on the rich for two years — that’s the $65 billion — and turn them into new cuts aimed at business. The new cuts wouldn’t end after two years like the proposed temporary extension of tax cuts for the wealthy would, Warner’s office told TPMDC today. Instead, the new cuts for businesses would remain in place permanently — paid for, Warner’s spokesperson told me, solely by the economic growth they would create.
Notably, the Congressional Budget Office determines the cost of the tax cuts, often based on a 10 year time frame — and they would not count potential economic growth in the score. So if Warner’s proposal became law, the final tally would look more like the deficit-widening tax cut extensions he proposes to replace (nearly $700 billion worth of tax cuts) than the $65 billion he suggests in his article.
The beauty of his proposal, Warner says, is that it does what Obama promised on the campaign trail — roll back the Bush tax cuts on the wealthiest — while also answering Republican claims that those tax cuts on the rich are really an economic booster shot for small business owners.
“My proposal does not grow the size of government, or increase tax revenues,” Warner writes. “Instead it moves tax cuts from one area to another, in order to encourage jobs and investment.”
In an article following up on Warner’s op-ed, the FT reported though some “officials” see positives in the plan, time is running out to negotiate it before the tax cuts expire.
“Embracing is a long way from enacting,” the Los Angeles Times reported.
Watch Warner discuss his plan and it’s chances on MSNBC today:
