US Government Debt Different - Finance Department - University of ...

144 Can the United States Achieve Fiscal Sustainability? Will We?perity can mobilize large amounts of money to support challengesto Republicans whom they consider insufficiently conservative. In2010, candidates associated with the Tea Party upset Republican incumbentsor establishment candidates in six Senate primaries; althoughbreaking the Taxpayer Protection Pledge was not an issue inthose elections, this performance showed the political costs of failingto toe the conservative line. 48As a result, proposals that would increase tax revenues are effectivelyoff the table in Washington. During the debt ceiling negotiations,Boehner at one point offered $800 billion in higher tax revenues overten years, but this tax “increase” came with two big caveats. Much ofthose revenues were created by the assumption that lower tax rateswould generate additional economic growth 49 —an assumption thatmany economists question. In addition, the $800 billion was only anincrease from a baseline that assumed the extension of the 2001 and2003 Bush tax cuts, which were (and are) scheduled to expire at theend of 2012. In other words, Boehner’s offer was for a large tax cutrelative to current law. There is controversy about exactly what happened,but it appears that Obama asked for an additional $400 billionin tax revenues, which Boehner said he could not get his caucusto approve; Obama then decided to settle for $800 billion at the lastminute, which Boehner also rejected. In the “supercommittee” negotiationsthat followed the passage of the Budget Control Act, Republicanmembers proposed $300 billion in additional tax revenues,but thirty-three Republican senators insisted that there should be nonet tax increase and powerful House Majority Leader Eric Cantorrefused to endorse the proposal. 50 Even that $300 billion offer wasonly possible because of the impending expiration of the Bush taxcuts, which made it possible for Republicans to frame it as a way toavoid a large tax increase. 5148 The Senate primaries were those in Alaska, Delaware, Florida, Kentucky, Nevada,and Utah.49 Wallsten, Montgomery, and Wilson, note 45, above.50 Jennifer Steinhauer and Robert Pear, “G.O.P. Is Optimistic but Democrats AreGlum on Deficit Panel,” The New York Times, November 15, 2011; Robert Pear,“G.O.P. Senators’ Letter Clouds Talks on Deficit,” The New York Times, November3, 2011.51 Robert Pear, “Deficit Panel Seeks To Defer Details on Raising Taxes,” The NewYork Times, November 13, 2011.