Jason Furman, who served as President Obama’s chairman of the Council of Economic Advisers and is now a professor at the Harvard Kennedy School, has a message for Corporate America: “If the business community still believes in fiscal responsibility, now would be the time to speak up.”
Writing in The Wall Street Journal, Furman notes that not so long ago, Republicans and many of their supporters were talking about revenue-neutral tax reform. That approach made sense, Furman notes, given the state of the debt and deficit: “The wide consensus on the need for revenue-neutral reform reflected a recognition that the 1981 and 2001 model of tax cuts makes no sense in today’s fiscal environment. Tax revenue as a percentage of gross domestic product is lower today than it was when Presidents Reagan and George W. Bush cut taxes.”
But Republican leaders are now promoting a tax plan that would increase the deficit by $1.5 trillion, raising debt held by the public from 77 percent of GDP to 98 percent of GDP in a decade. According to many economic models — including the Penn-Wharton Budget, run by an economist who served in the George W. Bush administration — that added debt will reduce economic growth over time.
Furman calls on Corporate America to stick to its guns and demand a tax plan that at a minimum doesn’t make the current fiscal situation any worse. And he also provides a funny little metaphor on the change that has occurred over the past few months as the GOP worked out its new tax proposal: “It is as if I sent my children off to perform chores in exchange for a candy bar, but instead they discussed doing chores for six months, did none of them, asked for $1.50, and tried to use it to buy five $1.50 candy bars.”