The good news is that at least some members of Congress and their staffs seem to be busy doing real work.

CQ Today, the authoritative online news journal covering Congress, is reporting that small bipartisan groups in both the House and Senate are back at the tough task of tackling the long-term federal deficit challenges that threaten the economic health of the nation.

The activity is taking place quietly, out of sight of the distorting lenses of election-year campaigning and ideological posturing.

The groups are trying to craft specific legislative language for bills that would produce gradually declining deficits through various combinations of increased revenue and decreased spending.

The ideological posturing often boils down to spending cuts (generally favored by Republicans) versus higher taxes on the wealthy (generally favored by Democrats), but the real challenges are much more complicated than that.

For example, if the current efforts in the House and Senate are going to make meaningful progress, they will have to take hammer and chisel — a jackhammer might be better — to the federal tax code.

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The code’s knottiest problem, however, is not the marginal tax rates applied to adjusted gross income but, rather, the preferential tax adjustments designed to encourage and subsidize certain kinds of activities.

These add about $1 trillion to the budget deficit every year. The conventional term for these structural provisions is “tax loopholes.” Legislators call them “tax expenditures” because their effect on the budget is identical to the effect of spending.

Because tax expenditures are buried in the tax code, people who use them often are not even aware they are benefiting from a government program. That tends to reinforce negative notions that government isn’t really helping people.

When it comes to the complex challenges of real budget reform, it will take courage to make progress.

 


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