Taxation Without Penetration

The GOP has lost its purity on taxes, but the budget deal tries to keep up the façade. 

Senate Budget Committee Chairman Patty Murray (D-Wash.) and House Budget Committee Chairman Paul Ryan (R-Wisc.) announce their deal on Tuesday.

Photo by T.J. Kirkpatrick/Getty Images

Some years ago, I recall reading a series of trend pieces about how teens these days are engaging in rampant oral and anal sex in an effort to preserve their status as “technical” virgins. This turns out to not be the case. Nobody is really that dumb—kids just experiment with a wide range of sexual activities all at once. They don’t base major decisions on a set of meaningless distinctions.

One can only wish that House Budget Committee Chairman Paul Ryan and his allies in the GOP caucus had that much sense. But it doesn’t seem so, judging by the deal they brokered late last night with Senate budget chair Patty Murray and her team.

The deal, which is certainly better than sticking with the status quo, reverses about $45 billion worth of sequestration next year and about $20 billion worth of sequestration the following year. Half of that extra spending will go to the military, and half to the nondefense discretionary portions of the budget. That’s good news for the economy, because that $65 billion will be offset by increased revenues and lower spending over the longer term—exactly how an economist would say the offsets should be structured. They threw in some extra long-term deficit reduction for good measure, extending Medicare provider cuts for another two years—although why they didn’t put that money to use for extra sequester relief is beyond me.

The point is, while there are certainly nits to pick here, it’s basically a good deal. And it’s no coincidence that the biggest portion of spending cuts falls directly on the shoulders of federal employees via reduced pensions. They won’t like it, but the federal workforce is such a big loser under sequestration that it’s unlikely to want to scuttle the deal.

What’s weird, though, is that Ryan thinks he can do this deal and still be saving himself for Grover Norquist.

Democrats used to say they would insist on tax increases doing a fair share of the work of deficit reduction. Republicans hate tax increases, so we used to get no deals of any kind. But this deal works because both sides have agreed to exploit a little semantic ambiguity around what exactly constitutes a “tax increase.” Officially, the deal has no tax increases. Instead it hikes “user fees” of various kinds. So, for example, the “fee” assessed to air passengers to pay for aviation security will be increased. But no taxes will be raised.

Get it?

I hope you do. I sure don’t. I’m flying to San Antonio with my wife in January, and I just checked the receipt for our airfare. It contains a line item for “taxes, fees, and surcharges” which are listed separately from “airfare.” The conceptual separation between airfare (the price of tickets the airline chooses to charge) and not-airfare (stuff the government makes you pay) is clear. The conceptual distinctions between the different kinds of stuff the government makes you pay are not clear at all.

Delving into deeper detail, I see I’m paying a U.S. Federal Transportation Tax, a U.S. Flight Segment Tax, a Sept. 11 Security Fee, and a U.S. Passenger Facility Charge. The first two are taxes, the third is a fee, while the fourth, I suppose, is a surcharge. But what’s the difference? I think it’s pretty obvious that there isn’t one. The fee is a kind of tax, just one that’s called a fee. But what if I started calling my beloved gasoline tax a gasoline fee? Could we roll it into the deal then?

Since there are a lot of crazy people in the conservative movement, and some of those people have seats in Congress, this kind of thinking is going to cost the deal a lot of votes on the Hill. But that’s silly. It’s a good deal—it’ll improve the economy moderately, and it achieves the GOP’s goal of reducing spending. But if it makes sense for Republicans to do a deal that raises “fees” in exchange for spending cuts, then on what planet does it not make sense to do a deal that raises taxes in exchange for spending cuts? Who exactly are they trying to fool here? Their donors? Rush Limbaugh? Backbenchers? Writers of bogus trend pieces?

If horny teenagers are smart enough not to make big life choices according to semantics and technicalities, then members of Congress should pull themselves together and do the same. Rigid opposition to raising revenue has failed as a governing ideology. That’s what Ryan is tacitly admitting with this deal. Now he needs to admit it to himself. Then and only then will the stage be set for a bigger deal to put these budget crises permanently behind us.