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Wednesday, June 15, 2011

Coburn: ending the ethanol subsidy is (half?) a tax cut

I have been intrigued in the past to note that some conservatives characterize reductions in "tax expenditures" -- targeted tax breaks, such as for ethanol production or mortgage interest -- as "spending cuts" rather than as "tax hikes."  But Tom Coburn has gotten even more creative. Yesterday, Coburn won the support of 34 GOP senators for an amendment that would end the ethanol subsidy -- a vote he staged as a refutation of Grover Norquist's insistence that every closed-out tax break has to be offset with an equal tax cut.  Last week, ratcheting up his months-long feud with Norquist, cast ending a wasteful tax subsidy like this:

“Today’s way of doing business is a tax increase on anyone who can’t hire a tax lobbyist or make large donations to special interest groups in Washington,” Coburn said in a Friday statement. “Taxpayers are tired of this game and expect us to eliminate wasteful special interest spending in all of its forms.”
That is real verbal jujitsu.  Ending a tax break is not only cutting wasteful spending, it's ending a tax hike. Translation: if you cut marginal rates, close out tax loopholes and net substantial additional revenue (as Bowles-Simpson and most other deficit reduction plans propose), you are "cutting taxes." We're back to that circumlocutory letter that Coburn Chambliss and Crapo said to Norquist when Norquist first started screaming that raising new revenue by cutting tax expenditures would violate his no-new-taxes-ever pledge.

In any case, Jonathan Chait sees the 34 GOP votes for Coburn's amendment as a watershed, a slight loosening of Norquist's chokehold on the GOP.  I hope he's right.

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