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Despite talk, lobbies add to deficit growth

If you want to understand why cutting the federal deficit is so hard, you can't do much better than to look at the Business Roundtable.

The roundtable is one of the more moderate big-business lobbying groups. Its president is former Michigan Gov. John Engler and its incoming chairman is W. James McNerney Jr., the chief executive of Boeing. When roundtable officials talk about the deficit, they use sober, commonsense language that can make them sound more reasonable than either political party.

But the roundtable is actually part of the problem.

Rhetoric aside, it consistently lobbies for a higher deficit. The roundtable defends corporate tax loopholes and even argues for new ones. It pushes for a lower corporate tax rate. It favors the permanent extension of the Bush tax cuts. It opposes a reduction in the tax subsidy for health insurance, a reduction that was part of the 2009 health reform bill. Oh, and the roundtable also favors new spending on roads, bridges and other infrastructure.

It's easy to look at the squabbling politicians in Washington and decide that they are the cause of the country's huge looming budget deficit. Certainly, they deserve some of the blame. The larger problem, though, is what you might call roundtable syndrome.

In short, there isn't much of a constituency for deficit reduction. Sure, plenty of people and special-interest groups say that they are deeply worried about the deficit. But they are not lobbying for specific spending cuts or tax increases. They aren't marshaling their resources to defend politicians who take tough stands, like President Barack Obama's 2009 Medicare cuts or Rand Paul's proposed military cuts.

Instead, many of the officially nonpartisan groups in Washington are even less fiscally responsible than the partisans. Public-sector labor unions have fought changes to pensions and work rules that could lead to less expensive, more effective government. Private-sector unions — along with the roundtable — have defended the huge tax subsidy for health insurance, which drives up health costs.

When I ask roundtable officials and other lobbyists about this contradiction, they show an impressive ability to avoid specifics and stick to their talking points. Engler, by e-mail, said, "A simpler, flatter tax system can be enacted in a fiscally responsible manner that better serves American workers and supports economic growth."

Taken by itself, this statement is entirely accurate. The corporate tax code is a mess. A better code, say both conservative and liberal economists, would be flatter — that is, have a lower rate and fewer loopholes.

But the roundtable is not pushing for the simpler, flatter, fiscally responsible code that Engler mentions. It's pushing for tax cuts for members: a lower rate, the continuation of existing loopholes and the creation of new ones, like a permanent credit for research and a tax holiday for overseas profits. The roundtable, in other words, is lobbying for a more complex, less fiscally responsible tax code.

The deficit is one of those national challenges that will require tough choices and courageous leadership. Many of those choices and much of that leadership will have to come from politicians. But I'm guessing we won't solve the deficit until the politicians get some help — and simply calling yourself a fiscal conservative doesn't count as help.

Despite talk, lobbies add to deficit growth 07/07/11 [Last modified: Friday, July 8, 2011 12:02am]

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