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Will the House Republican Plan Lead to a Tax Increase?


Posted by Mattie Duppler on Tuesday, July 26th, 2011, 3:55 PM PERMALINK


The release yesterday of the House Republican plan to solve the debt limit debate in a two-step process has raised questions as to whether the second step in the proposal will lead to a tax increase. After an initial debt extension of lesser value than cuts enacted, the proposal enacts a Select Committee that is responsible for finding $1.8 trillion in savings before more borrowing authority can be exercised in the spring.

The Select Committee will be comprised of twelve members, with leadership from both parties and both chambers selecting who will serve on the committee. The Committee is required to submit a proposal to enact real savings that must be approved by both chambers of Congress and signed into law by the President. Only then will the debt ceiling be raised, again at an amount less than the enacted amount of spending cuts.

That the bill does not explicitly prohibit tax increases as part of the Committee’s final plan has caused some concern. It shouldn’t. By holding firm throughout the debt limit debate on their pledge not to raise taxes, Republicans have removed taxes completely from any debt limit negotiations. There is no reason to believe that the intervening months will weaken this resolve.

Since a tax hike is dead on arrival in the House, any Committee wishing to be a serious contributor to the debt limit debate will not recommend a plan with tax hikes, which they know cannot pass the chamber.

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