Gregg: Some light at end of the tunnel

After much ado and little done in Washington, is that a glimmer of light we see coming down the tracks? It could be, maybe.

There have been three items of good news during this last week or so. Three. Count them.

Let’s take a moment to say a small — but not excessive — hallelujah.

{mosads}First and not necessarily foremost, but still truly significant: Sen. Ron Wyden (D-Ore.), the incoming chairman of the all-powerful Finance Committee of the Senate, implied that the Congressional Budget Office and Joint Tax Staff may be turning rational.

For years, the CBO and Joint Tax Staff have subscribed to a counter-intuitive method of scoring tax law changes.

Each has essentially taken the position that when you change the tax law to incentivize people to invest for real returns rather than for tax benefits there is no resulting economic benefit or increase in federal revenues.

It is a position that is indefensible as matter of logic but is defensible if you are the CBO and the Joint Tax Staff, and need to have historical consistency so that too much common sense does not interfere with spending and tax policy.

Now we learn from the new chairman of the Finance committee that there is a chance this incredibly destructive approach to scoring tax policy changes may be adjusted, at least slightly.

The implications of this are immense. For the first time, people on both sides of the aisle who want to restructure the tax laws by reducing rates, special interest deductions and exemptions may have the chance to get a score that reflects the massive economic expansion that such an approach could generate.

In plain terms, this means that tax reform along the lines of the 1986 Reagan-Rostenkowski template — an overhaul that reduces rates while maintaining progressivity — may be possible.

Such an outcome would be a tremendous improvement in the way we tax our nation’s job creators. It would also give us an edge in the world markets where we must now compete.

Second and as a corollary to the first item of good news, House Ways and Means Committee Chairman Dave Camp (R-Mich.) is putting forth a comprehensive tax reform bill that will reduce rates, eliminate or cut deductions and exemptions, and begin the debate in earnest as to how we grow our economy.

Tax policy is at the center of what a government can do to incentivize American entrepreneurs to take the risks necessary to create jobs and generate prosperity.

Our present tax laws are a disaster in this arena. The Camp proposal is a ray of light that should energize the debate on how we restructure our tax code. Up to now, that debate has been convoluted and dysfunctional. It is dragging down the nation’s potential for prosperity.

Third, Defense Secretary Chuck Hagel has proposed a defense budget that addresses the core issue of how we defend ourselves in this post 9/11 world.

It is the most out of the box proposal since the end of the Cold War.

It may not be perfect, but it challenges in a thoughtful and creative way a defense structure that has become both incoherent and calcified.

It begins with defining the purpose of our national defense. It states that the essential goal of national defense today is to find and destroy terrorists who threaten America and our allies.

To accomplish this we do not need a “boots on the ground” strategy, or the ability to fight two land wars , which are ideas that are remnants from Cold War times.

Rather we need to be able to find an enemy who is not readily detectible in the historic context of a nation state. We need massive intelligence capability . The Hagel budget acknowledges and funds that need.

We also need the capability to deliver lethal force quickly and effectively when those who wish to do us harm are discovered and identified. The Hagel budget also recognizes this, although it is not clear that a commitment to the importance of naval resources to deliver this type of force is fully funded.

Over 50 years ago, our last truly great military and domestic leader, President Eisenhower, advised the nation in his farewell address that a military-industrial complex that did not adjust to the changing needs of changing threats could hamper rather than enforce our national defense needs.

Hagel must have read his speech. His plan is a call to arms to defend this nation, not to defend the forces of the status quo. It is refreshingly creative.

In a time when there is a certain justifiable cynicism across the land about the effectiveness of our federal government, these three candles at the end of the tunnel present some genuine hope. It is a nice change.

Judd Gregg is a former governor and three-term senator from New Hampshire who served as chairman and ranking member of the Senate Budget Committee.