C ... One third of of the deficit reduction under Bowles-Simpson is from revenue increases, and two thirds is from spending cuts. The above is about tax cuts, but the spending cuts will, in the end, likely hit lower income households harder and end up being regressive as well.
My take is that the deficit commission is fine economics. I do think capping the amount of federal tax revenue is key, so I like that aspect greatly. Such a guarantee is a minimum to get a serious political conversation. Capping federal spending, which the report also endorses, is also essential. But I think the whole of the entrepreneurial community won't like treating capital gains as income. The public might understand this better if we just described cap gains as startup gains. Or maybe growth gains. As Uncle Miltie says, you tax more of something, you get less of it. Do we really want fewer startups?
That said, I tend to view the process skeptically. A good friend on Capitol Hill laughs every time a commission is announced. There's simply no better way to play political dodgeball than to assemble a blue ribbon commission, which kicks the issue down the road a year or more. My own skepticism is rooted in one of the Kane mantras:
The Budge Deficit isn't a Math Problem.
I once had a dream that I would come to Washington, DC and share my great ideas with the wise men and women in Congress. "Eureka!" they would reply. "Here is a Good Idea!" Time has solved that idealistic illusion. Congress knows the math. They can appreciate the many ways that 1 + 1 =/= 14,750,200,000,000 (the current U.S. GDP). If it were just a math problem, legislators would have solved it years ago. No, the addiction to a budget deficits is a Rules Problem. To solve it, the nation has to change the rules.