For Minnesotans, the deficit debate currently at center stage in Washington is a lousy rerun with a predictable ending.
Our version of "tax the rich" vs. "no new taxes" led to an avoidable state government shutdown and a final budget deal composed of hidden taxes, borrowing, and shifts that did little to address the structural budget problems plaguing the state. Comprehensive tax reform in Minnesota will come later, we were assured by both parties.
President Obama offered his own tax-the-rich plan Monday, and Republicans quickly trotted out some of the same critiques we heard in Minnesota when Gov. Mark Dayton went after higher-income taxpayers.
In short, the GOP argues, raising tax revenues through higher taxes for the wealthy and corporations is politically motivated class warfare that would hurt an already struggling economy. Sound familiar?
The political motivations are obvious: Obama wants to paint his Republican presidential rivals as being callous toward the struggles of low- and middle-income Americans while they protect the rich and big business.
He said he would veto any deficit legislation that relies only on spending cuts. He moved away from a mostly failed strategy of compromise to go on the attack -- a move sure to be applauded by his base.
Obama would reduce the federal deficit by more than $3 trillion over the next decade through entitlement trims, defense cuts and tax increases. Those increases target upper-income Americans and corporations by ending the Bush income tax cuts, closing loopholes and limiting deductions for couples earning more than $250,000 a year.
Politics aside, there's much to like about the balance of tax increases and spending cuts in Obama's plan -- as far as it goes. But unfortunately, neither Obama nor his Republican critics have been willing to make the case for the kind of sweeping reform that would create a more sustainable, fairer federal tax code.
Given the campaign calendar, don't expect that kind of ambitious overhaul to take root, and don't expect the Obama plan to become law. Yet real tax reform is what's needed -- and it's what will still be needed when the 2012 election is over, whoever wins.
As the U.S. economy continues to deleverage, taxpayers at all income levels and corporations large and small must share some of the pain if we are to sustain the level of government services and quality of life that Americans demand.
But there's a better, more responsible way to ensure that shared sacrifice is fair sacrifice. Many economists argue that broadening the tax base by limiting deductions and closing loopholes could allow a switch to lower rates but still generate more tax revenue.
The 2010 Simpson-Bowles commission came up with several options for tax reform that would have ended or trimmed home mortgage interest deductions, tax-free treatment of employer-paid health insurance, and preferred rates for capital gains and dividends.
However, the top income tax rate for both individuals and corporations would have been cut from 35 percent to 29 percent or less. The commission also recommended higher Medicare premiums, increasing the early retirement age from 62 to 64, and raising the full the retirement age to 69 by 2075.
The president's plan only nibbles at entitlements, and we're unlikely to hear a case made for higher Medicare premiums during Thursday's GOP presidential debate.
Fittingly, the Simpson-Bowles report was titled "The Moment of Truth." That moment is here, but we can't help feeling it's slipping away.
