If there’s any good news in the bickering in Washington these days, it’s that America’s fractious leaders recognize two important things: the government of the United States cannot default on its debts, and our tax system needs a major overhaul.
The leadership in both parties is talking about raising the debt ceiling in “when” not “if” terms, even if they don’t agree yet on how to get to that result. That’s a good thing. The debt ceiling was raised repeatedly by Republicans under President George W. Bush; it’s silly that his party can’t collaborate with a Democratic president to do the same thing.
The better news would be the embrace of a broader tax reform plan, similar — we hope — to a landmark 1986 law fashioned by President Ronald Reagan and Democrats in Congress. In exchange for closing loopholes, it lowered overall tax rates.
Why don’t we have the same system now?
Because since then, every year, special interests lobby for preferences in the tax code for this industry or that economic activity. Like barnacles on the hull of a sailing ship, these tax giveaways gradually erode the efficiency of the whole machine. The powerful win, and the broad economy that most of us live in loses under today’s tax code.
The Republican leader in the Senate, Mitch McConnell of Kentucky, said the GOP and the president favor a broad tax reform. It is “long overdue,” McConnell said.
We agree, although it’s hard at this point to see a path forward that the warring parties will agree on.
It will take some time and might not be done in every detail before the 2012 election. But that everyone recognizes the problem is grounds for a bit of optimism.