Elmendorf: Tax reform could help raise revenue

But under questioning from Sen. Ron Wyden (D-Ore.), Elmendorf also stressed at a hearing that the economy could not grow the government out of its current debts. The CBO estimated this week that the deficit for fiscal year 2011 would grow to $1.5 trillion.

The CBO chief, as expected, was wary of delving into politics. But he did indicate that phasing tax provisions in and out was “damaging to the economy” and made it difficult for families and businesses to plan.

Elmendorf also generally seemed to agree that making changes to the individual and corporate tax codes at the same time was preferable.

“Of course, it’s up to you and your colleagues to judge how many changes you can think through and agree upon in a finite period of time,” Elmendorf told Wyden.

“But yes,” he added, “I think from an analytic perspective, trying to think about all the pieces of the tax code together would be most effective and most appropriate.”

A leading advocate of tax reform, Wyden was clearly pleased earlier this week when President Obama called for tax reform during the State of the Union address. 

“It is the most important step we can take to get the American economy growing,” Wyden said in a statement Tuesday night. “The president laid out the task ahead tonight — I plan to get to work tomorrow.”