WASHINGTON — House Minority Whip Steny Hoyer, D-Md., urged Congress on Monday to “go big” on deficit reduction before the November election and said he believes there is “broad consensus” for a comprehensive plan similar to those proposd by the Bowles-Simpson and Domenici-Rivlin commissions.
Each of those bipartisan groups recommended curtailment or elimination of tax-exemption for new bonds as a means of cutting the federal deficit.
“We need to look seriously to the framework of Bowles-Simpson and others as a guide and make sure talks take place,” Hoyer said, speaking at an event sponsored by the Third Way, a left-leaning think tank. He added that all options must be on the table to curb the deficit and a staffer in his office said tax-exemption could be considered but “with no more or less focus” than other tax preferences.
“Our tax code is complicated, contradictory and extraordinarily inefficient,” Hoyer said, recommending that the tax base be broadened. “We need comprehensive reform. Such reform could greatly simplify filing, facilitate ease of compliance, eliminate disparities in treatment and, yes, raise additional revenues while bringing down rates and reducing preferences.”
As policymakers continue to embrace these plans and push for moving forward with deficit reduction despite the long odds of tackling anything before the election, state and local groups vow to continue to talk with lawmakers about the importance of tax-exemption and the negative impact it would have on state and local governments.
“It is not going to get easier to reach an agreement,” Hoyer said. “In fact, it will only get more difficult as time passes and our debt grows. That’s one reason why I will keep pushing to reach an agreement before November — and why everyone concerned about our debt ought to do so as well.”
He noted that the nonpartisan Congressional Budget Office’s long-term fiscal outlook estimates external debt-to-gross domestic product would rise from 70% to 190% by 2035. A bipartisan, bicameral group is currently working on a legislative debt package, which Hoyer said is expected to be completed by spring.
In December 2010, the President’s National Commission on Fiscal Responsibility and Reform, led by Democrat Erskine Bowles, former chief of staff to President Bill Clinton, and former Sen. Alan Simpson, R-Wyo., made recommendations for deficit reduction in 65-page report called “The Moment of Truth.” It contained an “illustrative individual tax-reform plan” recommending that there be no tax-exemption for new muni bonds.
Before that, the Bipartisan Policy Center’s debt-reduction task force issued a 137-page report, “Restoring America’s Future,” that urged there be no tax-exemption for new private-activity bonds, including bonds for single- and multifamily housing, airports, water and sewer facilities, hospitals and small manufacturing facilities. That task force was led by Alice Rivlin, a senior fellow at the Brookings Institution, as well as former Sen. Pete Domenici, R-N.M., now a senior fellow at the BPC.