Is closing loopholes any different than cutting spending?

With the sequester cuts looming, Washington is having another debate on cutting the deficit.   Everyone seems to agree that the sequester cuts are too deep, and will have a devastating effect on growth, probably forcing the economy back into recessing.  The president has proposed a smaller cut and raising some tax revenue through closing loopholes for additional deficit reduction.   The Republicans reacted in character, saying revenue was a non-starter. 

My question to Republicans is: why is closing loopholes any different than cutting spending?

Let's consider the mortgage interest deduction as an example.  (I'm simplifying a bit to keep this post short.)   For the current deduction, you simply subtract (deduct) the amount you paid in home interest (call it I) from your income.  If your marginal tax rate (tax bracket) is R, you save R*I in taxes.

Compare this to a plan where there is no mortgage deduction.   Instead, every year you send in a form with the amount you paid in interest I and your tax bracket R, and the government sends you a check for R*I.

With either of these plans everyone ends up with the same amount of money.   But the first one is considered a tax cut, which the Republicans are presumably vehement about defending.   The second one is government spending, which the Republicans would presumably want to end.   But the plans are indistinguishable in purpose and effect, so how can there be any justification to being for one and against the other?

The conclusion here is that Republicans are just wrong about the distinction between tax deductions and spending.    If you want to reduce the deficit, it's equally valid to cut spending or end deductions.  The deductions are just spending through the tax code.

A related place where rationality gets trampled has to do with Keynesian stimulus.   The president has been all for economic stimulus, which has pre-2011 been a standard bipartisan response to economic contractions.   With the Tea Party wave, Republicans have balked at stimulus, saying it doesn't work; indeed saying that it didn't work in 2009.   In other words, they are saying government spending does not create jobs.

But their stance in the sequester fight totally belies this.  After voting for sequester (a fact they're trying to downplay) they are now worried about the resulting unemployment and reduction in growth as a result.   This is exactly the stance someone who believes in Keynesian stimulus would have.   But if cutting spending reduces growth and employment, wouldn't raising spending increase growth and employment?   Republicans arguing against sequester cuts in one breath and against stimulus in the next are being totally contradictory.