Senate Finance’s Baucus: U.S. Headed Toward Fiscal Crisis Like Europe

Baucus said a 21^st century tax code must promote four goals, which are the “keys to America’s future and securing our lead in the global economy”: jobs from broad-based growth, competitiveness, innovation and opportunity.

Rivlin, the former Clinton administration budget director who’s now co-chairwoman of the Bipartisan Policy Center’s Debt Reduction Task Force, was part of a panel discussion after Baucus’ remarks. She said that she was glad to hear Baucus say that “we’re going to need more revenue as we address the deficit problem.” She also supports Baucus’ view that there should be a progressive tax rate and not a “flat tax.”

Bob Greenstein, president of the Center on Budget and Policy Priorities, said that “no one expects to rewrite the tax code during a lame duck” session of Congress, such as the session after the November election. The “first goal” of tax reform, he added, “will be raising revenue.”

Indeed, Bill Thomas, R-Calif., former chairman of the House Ways and Means Committee, who was also part of the panel, said that no one knows what will happen in a lame-duck session “unless you can tell me who will control the Senate and who [will] win the presidential election.”

Thomas also questioned what Baucus meant when he said “everything” was on the table regarding tax reform. “Does he mean Social Security? I know he means defense,” Thomas said.

As to the tax cuts that will expire at year end—which include the Bush tax cuts—Rivlin said: “The fiscal cliff is a real cliff. It would be very bad for the economy if we let all of the tax cuts expire all at once.”

Congress should have a workable “framework” to address tax reform and the debt and deficit that they can “come back to in six months,” Rivlin said. “Six months seems reasonable—it’s not kicking the can down the road, it’s moving the fiscal cliff for a few months, but it’s still there.”