« Dems Need Fiercer 'Frames' | Main | Dems Must Fight for Economic Reforms »

CAP Tax Reform Plan Can Win Consensus

Today’s Washington Post features an op-ed article by John Podesta, president of The Center for American Progress (CAP), offering an aggressive tax reform plan designed to counter the forthcoming Administration package now being prepared.

You may recall what happened the last time the Bush Administration secured a tax “reform” package in 2001. Podesta describes it all too well:

We ended up with a tax bill that produced exploding deficits, protected the special interests, undid the progressivity of the tax code, and laid more of the burden on wage earners and less on those with investment income.

Unfortunately the Democratic response was as ineffectual as the GOP plan was venal. As Podesta notes:

Our arguments against it were never heard; we didn't offer a larger progressive counter-narrative, and we didn't offer a tax cut alternative worthy of its name. Hampered by these strategic errors, the Democrats were left with a "just say no" campaign that ultimately was not much of a match for the president's considerable lobbying effort…we lost more than the vote; we also lost a crucial opportunity to remind people that progressive values -- the belief in an expanding middle class and in providing the greatest rewards for people who work the hardest -- promote both economic growth and economic justice.

In 2005, however, Dems have a clear opportunity to present a tax reform package that will earn the support of working people, particularly if it is based on three principles identified by Podesta --- fairness, rewarding hard work and keeping it simple. In this way, Podesta argues, Dems can “seize the moral high ground.” The CAP reform plan meets these criteria by taxing all sources of income according to a simple and more equitable three-rate structure at 15, 25 and 39.6 percent, cutting the number of tax brackets in half, closing corporate loopholes and expanding eligibility for the child tax credit. The CAP plan would also shore up the Social Security trust fund and reduce by half the gap between revenues and outlays.

As a former chief of staff for President Clinton, Podesta understands that enacting such reforms will be a formidable challenge given the GOP domination of congress and the white house. Yet, win or lose, making a determined effort this time around will help position the Dems advantageously for ‘06. As Podesta says, "This is a fight that the president’s opponents can win. But they must get on the field.”