The Gang of 36

It seems to have been quickly mentioned and then forgotten, but the joint press conference held by 36 senators to promote major tax reform is a seminal event for the future of the country. Indeed, it provides a map to the hidden treasure of economic growth in America, a map that president Obama seems intent on ignoring.

First, let's look at who was present for the press conference. Thirty-six senators were the sponsors of the event; they included many Republicans and many Democrats. Simply put, there were more than enough senators there to form the nucleus of a group to pass tax reform when combined with either the Democrats or the Republicans that remained. There were strong liberals and just as strong conservatives in the group. It was a bipartisan and non-ideological group that was pushing a plan to restore growth to the American economy.

Second, let's look at what their idea is. In a nutshell, the senators want the passage of a new income tax code for individuals and business. The new code is to get rid of the deductions and exemptions and loopholes in the current system and replace it with a tax a greatly reduced rates on essentially all income. What does that mean? Again, the simple answer is that two taxpayers who each make the same amount of money will pay the same amount of taxes. Businesses that have super lobbyists will no longer pay lower taxes since the loopholes will be gone. If GE makes billions in profits it will actually pay taxes on those profits even though it has connections at the White House. By the same token, a business that has no connections to get loopholes will see its taxes lowered substantially.

The point of this tax reform is to bring back growth to America. Businesses and people will no longer need to conform their activities to earn income that will minimize taxation. The need to spend billions on tax professionals to guide their clients through the myriad of arcane tax regulations will be greatly reduced. The system will be much fairer. Many will have more cash to spend or invest. Most of all, the perception of an improved climate for the economy will lead to the fact of higher spending and investment. All of this will result in greater growth in the economy, and as the growth returns, more people will regain confidence and this, in turn, will further increase growth.

The senators want the Super Committee to put this reform in motion as part of its report to Congress in November. That is a noble goal, although it may prove too difficult to achieve given the short time span until Thanksgiving. The Super Committee could, however, give the plan a major push forward.

This tax plan by 36 senators is also the death of the Obama jobs bill. The president and his manic "pass the bill now" routine cannot possibly get past the senate with the Obama soak the rich tax increase plan. These senators want tax rate reductions. They want fairness restored to a tax code that currently rewards those who do the best lobbying. Obama claims that oil companies get special tax subsidies. These senators want the oil companies and every other business treated exactly the same way. Obama says that corporate jet owners get special breaks. These senators want every person or company that owns equipment to be treated exactly the same way. Obama cannot sell his bill in the face of opposition by these senators.

Hopefully, Obama will not ignore these 36 senators. My prediction, however, is that Obama will not cancel the remainder of his "Pas the bill now tour". It is too bad, since these senators have an idea that actually might work.