Sen. Chuck Schumer (D-N.Y.) told a press conference at the National Press Club today that the “old style” of tax reform thought — lowering rates and broadening the base by getting rid of loopholes — should be scrapped.
“That approach has distinguished lineage. Ronald Reagan and the 1986 Democratic Congress invented it. Simpson-Bowles validated it. The gang of six endorsed it,” said the vice chairman of the Senate Democratic Conference.
“But in the upcoming talks on the fiscal cliff, we ought to scrap it. The reason is simple, the old style of tax reform is obsolete in a 2012 world. It doesn’t fit the times because there are two new conditions that didn’t exist in 1986 but is staring us in the face today.”
Those conditions, Schumer said, are “a much larger, much more dangerous deficit” and “a dramatic increase in income inequality. Old style tax reform could make both conditions worse.”
He said the Gang of Eight trying to forge a compromise in the lame-duck session “are among my best friends in the Senate,” are erred in drawing off the 1986 model of Reagan-style reform.
The Gang of Eight — Dem Sens. Mark Warner (Va.), Michael Bennet (Colo.), Dick Durbin (Ill.), and Kent Conrad (N.D.), and GOP Sens. Saxby Chambliss (Ga.), Mike Crapo (Idaho), Tom Coburn (Okla.), and Mike Johanns (Neb.) — are meeting today through Thursday at Mount Vernon in an effort to avoid falling off the fiscal cliff.
“Leaders on both sides are actively encouraging their talks — I certainly am — but I hope that they can revisit their approach to tax reform,” Schumer said.
“Our needs today are different compared to 1986, and we cannot take the same approaches as we did then. We must reduce the deficit which is strangling our economic growth in the long term. And we must seek to control the rise in income inequality, which is hollowing out the middle class. The 1986 model would be ineffective, if not counterproductive, to solving these two challenges.”