Some tax breaks should die in deficit fix

Republican presidential aspirant Mitt Romney should make it clearer that he’s not talking about corporations, traditionally a GOP constituency, when he accuses President Obama of worsening the recession.

The recession, of course, officially ended two years ago. But the former Massachusetts governor, speaking Tuesday in New Hampshire, repeated a charge he has made before. Perhaps Romney was trying to say the recession not only hasn’t ended but has gotten worse for many Americans. But he should add that that’s not the situation for many businesses.

In fact, the Wall Street Journal predicted Tuesday that U.S. firms will report strong earnings for the second quarter, with the combined earnings of companies in the Standard & Poor’s 500 index rising nearly 14 percent from a year ago.

Keep in mind that a number of companies doing well now cut costs by shedding employees, which has kept unemployment high nationally and continued the recession within many homes. Many firms will never go back to more costly employment levels.

That context should carry more weight as Washington debates what to include in the deficit-reduction package that Congress is trying to craft in connection with raising the nation’s debt ceiling.

Enough firms have recovered from the recession to consider Obama’s proposals to end costly corporate tax breaks, including an accounting maneuver that lets companies claim higher costs than they actually paid for goods. Listing the higher expenses on their returns reduces their taxable income.

With the recession still a reality for so many families, shouldn’t corporations and individuals who have weathered the storm dig deeper to ensure the viability of the entire nation?

In that context, doesn’t it make sense, for example, to cap the value of itemized deductions for the highest earners?

There are other proposals that should not be dismissed out of hand as merely tax hikes. Likewise, more spending cuts must be considered in any realistic deficit-reduction plan. The administration has agreed that the largest entitlements — Medicare and Medicaid — cannot be exempt. Defense spending, too, must take a big bite.

There’s simply too much common ground for a deficit-reduction agreement to be so elusive. That it is suggests that too many politicians are calculating what their position will mean to their political careers rather than what it will mean to the country’s future.