Contrary to Speaker Boehner’s Claim, Budget Deal’s “Supercommittee” Can Consider Revenue Increases

Speaker of the House John Boehner erroneously claims that the legislation implementing the new debt limit agreement does not allow the joint congressional committee it establishes to propose revenue increases to help reduce deficits. The legislation does no such thing. Rather, it is the speaker's adamant opposition to considering revenue increases — even the elimination of wasteful tax loopholes — as part of a deficit-reduction package that may prevent a balanced approach to reducing the deficit through a mix of program cuts and revenue increases.

One question that has fostered different interpretations is whether the Joint Committee can consider increases in revenues as a means of achieving its deficit-reduction target, and — more particularly — whether it can consider tax reform that would produce higher revenues than if Congress extended expiring tax provisions (such as the 2001 and 2003 Bush tax cuts, which are scheduled to expire at the end of 2012) but lower revenues than if Congress let all of those tax cuts expire.

The issue revolves around what "baseline" is used in calculating the amount of deficit reduction that the Joint Committee's recommended policy changes would produce. The standard baseline that the Congressional Budget Office (CBO) uses is a so-called "current-law" baseline, which essentially assumes that Congress will enact no changes in current laws governing entitlement programs and taxes. Thus, it assumes that tax cuts that are scheduled to expire — including "temporary" relief from the alternative minimum tax (AMT), which Congress has routinely extended for years — will all terminate on schedule.