Gene Sperling echoes Larry Summers on deficit reduction.
Gene Sperling followed his boss's lead today and poured some more cold water on the idea that Democrats and Republicans could strike a deal on taxes by agreeing to cap deductions and close loopholes but not raise rates on top earners.
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Speaking at the Washington Ideas Forum, Obama economic advisor Sperling said he was "highly skeptical" that such an agreement would raise enough revenue to meet the president's standards for a balanced deficit reduction deal. Citing a Tax Policy Center estimate that found capping tax deductions at $50,000 would raise $749 billion over ten years, ABC news reporter Jonathan Karl asked whether that would be enough to satisfy the White House and resolve the impasse with Congressional Republicans.
"If you want to really have a large [deficit reduction] package, a significant package, you need to have well over a trillion dollars in revenues," Sperling said. "I am very skeptical that it is going to [be] politically or policy viable that you can get that much revenue from high income Americans just by capping deductions."
He added that the White House did not want to get locked into a framework that could force it to shift the burden of cutting the deficit onto the middle class, and that putting a hard cap on deductions would hurt charitable giving.
Sperling's comments were more or less in line with what Obama told reporters yesterday at his fist post-election press conference:
I think that there are loopholes that can be closed, and we should look at how we can make the process of deductions, the filing process easier, simpler.
But when it comes to the top 2 percent, what I'm not going to do is to extend further a tax cut for folks who don't need it, which would cost close to a trillion dollars. And it's very difficult to see how you make up that trillion dollars, if we're serious about deficit reduction, just by closing loopholes in deductions. You know, the math tends not to work.
So sorry, wonks. It looks like we're not going to find an elegant compromise to get us out of this tax battle.
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