The RSC Budget: A First Look

[Valin]

The Foundry:

 

 

Patrick Louis Knudsen

March 20, 2013

 

The Republican Study Committee (RSC) has proposed a budget that balances in just four years while holding tax revenue at near its historical average. It advances more aggressive entitlement reforms than the House Budget Committee plan, including Social Security, and features deeper spending cuts.

 

Nevertheless, the plan also suffers weaknesses, including too little funding for national defense and inadequate detail to justify all its spending reductions. Another failing is that, like the committee budget, it keeps revenues near the levels reached with the Obamacare tax hikes even though it repeals the health care bill’s spending provisions.

 

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As noted above, the budget maintains the tax revenue levels associated with Obamacare’s tax hikes. Because the spending is repealed, so too should be the tax revenues. Moreover, the RSC plan may not raise the 18.5 percent of GDP the tax code has raised on average since the end of World War II. By defining a tax base first, then applying a new lower rate, the RSC could achieve all its policy objectives and raise sufficient revenue, as The Heritage Foundation does with the New Flat Tax.