A group of economic advisers from the Bill Clinton era thinks it may have stumbled upon a brilliant solution for America's current economic situation: make it more like the Bill Clinton era. Which, given today's Washington gridlock, may not be all that brilliant. Today's new independent proposal for tax reform was put together by the left-leaning Center for American Progress, and it features a host of heavy hitters lending their names to the project. The list of authors includes two former Clinton Chiefs of Staff (William Daley and John Podesta); two of his Treasury secretaries (Robert Rubin and Larry Summers), and a handful of other top Treasury Department appointees from the swinging days of late 1990s surpluses. It's a rock-star lineup, if the last Democratic administration was your favorite band.
The cornerstone of the program, much like the one proposed by Obama, is returning to the top marginal tax rate of the 1990s—39.6 percent. (Matthew Yglesias has a good summary of its key points.) However, they would also raise the threshold for reaching that bracket to more than $400,000, far higher than the president's threshold of $25,000. The rest of the rates would stay the same on regular income taxes, but on many other kinds of taxes, the plan goes much further than the current Democratic wish list. Higher capital gains, no more carried interest deduction, a tougher estate tax, no reductions for health care premiums; and caps on itemized deductions.
But there's even more. While most of those changes would fall heavily on the rich, they also want to bring some of those deduction caps down to the people in lower income brackets and raise taxes on things like cigarettes, alcohol, gambling, and other odds and ends that hit people at all income levels. While Obama's plan calls for $1.2 trillion in new revenue, this one asks for $1.8 trillion... and not just from the richest earners.
In any other political climate, it sounds like a sensible attempt to make much-needed changes to our whacked-out tax code, without completely blowing it up. There's plenty of budget cuts and stimulus, too, and taken individually, many of the proposals could even win some shred of bipartisan support in Congress. But when the key deal breaker for Republicans is that Obama wants to raise taxes too much, it does help to come to the table with a plan that raises even more taxes, no matter how the fair the proposal might be. It's a nice dream and one that may someday see the light of day, but for now its just wishful thinking from the good old days—even these guys did help make the good old days.