Thursday, March 26, 2009

Finally, Someone Said It

Someone, somewhere, needed to state the obvious - that if we're serious about closing the deficit we're going to have to STFU and raise taxes. And it's no surprise to me, at least, that that someone is E.J. Dionne:
The debate on the budget is phony, the howling on deficits a charade. Few politicians want to acknowledge that if you really are concerned about long-term deficits, you have to support tax increases.

It goes on from there. Dionne points out that politicians who voted for Clinton's 1993 tax increases were roundly punished for it in the next election - this despite the fact that the '93 tax increases helped pave the way for the only budget surplus we've had in recent memory.

Spending cuts are great, but we're not getting out of this budget mess by spending cuts alone. Even if we get rid of all of our discretionary spending, we still won't close the budget hole - and no one who's serious about policy is suggesting we take even that step. We need a tax increase, and I'll leave it to people smarter than me to determine how taxes can be increased while causing the least amount of pain.


Mike said...

I was almost certain I had written about the sad need to raise taxes before, and I was partly right: going through my blog drafts, I unearthed a half-finished post I started on October 5, 2007 about the very subject. So I beat Dionne to this by a year and a half. Except that I was writing the post in response to another Dionne article regarding raising taxes temporarily to cover a costly war.

Anyway, the gist was that, even though the ideal would be to reduce federal spending rather than jack taxes, clearly that ain't happening anytime soon, so we better start paying for what we're paying for.

-Dave said...

Work busy, blog commenting way behind, working to catch up....

I agree with the premise - "fiscal responsibility" can't be married to "tax cuts for everyone all the time!"

That said, I think the link between the '93 tax increases and the federal budget surplus is so silly that I make it a point to simply disregard anyone who claims it. The Dot Com boom gave us those surpluses as surely as the Dot Com bust took them away. This is true to such a large extent that any other explanation becomes utterly trivial. My secondary explanation is the restraint showed by both the President and (to a sadly lesser extent from my perspective) Congress by not spending said windfall. The tax increases were, at best, a tertiary cause of surpluses.

It's like running a 10% deficit, cutting 1% from your budget, and getting an inheritance that pushes your income up by 15%. Yes, you did the responsible thing. Yes, it technically "helped" in that it moved you the proper direction. No, it wouldn't have gotten you close by itself, all other things being equal. So, in my opinion, no - you can't call it something that "helped pave the way" to surpluses.