On November 7, Republican senator Pat Toomey proposed a compromise on taxes to members of the supercommittee tasked with cutting the deficit. “There was a moment there, a 24-hour period, when several Democrats expressed a great deal of interest in the framework I laid out,” Toomey tells THE WEEKLY STANDARD. Dick Durbin, the second ranking Democrat in the Senate, called Toomey's proposal a "breakthrough."
“We thought we were making real progress," Toomey says. "Then the [Democratic] committee members, I think, checked in with some of their Senate colleagues and really allowed themselves to be swayed by the left-wing of their caucus. They backed off, retreated, from the progress we made that night. And from that moment on, it never felt like we were close.”
As part of a broader plan to rein in entitlement spending and reform the tax code, Toomey had offered to raise tax revenues $250 billion over 10 years. “What I said was, we should set a goal of getting all the tax rates lower by 20 percent--across the board... And then let’s find the combination of deductions that we would diminish, and exclusions that we would treat as taxable income," Toomey recalls. "I was willing to accept that the $250 billion ... revenue increase would come from the top two [tax] brackets, which was another huge concession to the Democrats. That by definition makes the tax code more progressive."
The $250 billion in higher taxes really was no small concession for Toomey, the conservative stalwart who had chased liberal Republican Arlen Specter from the GOP. Toomey says some fellow Republicans were "genuinely concerned" about his plan. And anti-tax activist Grover Norquist called Toomey's plan "poison." Toomey acknowledges it's a plan he wouldn't propose as a free-standing measure. But he thought it was worth it to get lower, pro-growth tax rates and entitlement reform.
In the end, Toomey didn't have to worry about allaying the concerns of some conservative Republicans. Democrats squelched the plan, saying the $250 billion in higher taxes wasn't enough. Although "several of our Democratic colleagues had repeatedly spoken about the virtues of tax simplification and tax reform," Toomey says, "they couldn’t budge from the idea of a trillion dollar tax increase." The Democrats also “never once throughout the entire process were willing to propose or accept our proposals about any type of structural reforms to the big health care entitlement programs,” according to Toomey.
"It’s like they were very concerned about the Occupy Wall Street movement," he added. "They had to demonstrate that they were willing to soak the rich." Why wasn't Toomey willing to go along with $1 trillion in higher taxes? It would have been "devastating" to the economy, he says.
Toomey's plan would have included an additional $250 billion in new revenues through a variety of non-tax measures, such as selling government land and making changes at Fannie Mae and Freddie Mac. Toomey says it was "troubling" that Democrats "didn’t seem very interested in accepting those kinds of revenues. It was as though money coming into the Treasury isn’t what matters. Someone has to be punished in the process.”
Toomey thinks that the White House wasn't interested in the supercommittee succeeding. “Had we been successful, it would have totally stepped on the president's campaign theme--the only campaign theme he has," Toomey says. "He certainly can’t run on his own job performance. He’s trying to run against a do-nothing Congress."