Home > Federal, National > The ongoing Debt crisis: CCandB still best option; Stop and cut spending!; War gimmicks and cutting defense-NO WAY; Boehner’s plans still better than Reid’s and Obama-What plan?; My gosh, enough spin, enough bulls–t; Obama FAIL, breaking, broke; What would our Founders do?; and The case for Tax changes, Contrarian views, and Compromise?

The ongoing Debt crisis: CCandB still best option; Stop and cut spending!; War gimmicks and cutting defense-NO WAY; Boehner’s plans still better than Reid’s and Obama-What plan?; My gosh, enough spin, enough bulls–t; Obama FAIL, breaking, broke; What would our Founders do?; and The case for Tax changes, Contrarian views, and Compromise?

July 28, 2011

One plan, two plans, three plans, four,

They’re junk, that’s enough, we can’t take any more.

Time for all to do what’s valiant,

Go back and pass “Cut Cap and Balance” !

Rep. Allen West: I Will Support Boehner’s Debt Plan and Here’s Why

Rep. Allen West said Wednesday that, unlike some of the other tea party-backed freshmen, he supports House Speaker John Boehner’s debt-reduction plan, even though it falls somewhat short of what he would like see invoked to tackle the nation’s fiscal malaise.“Because I look at it this way, coming from my military background: We can sit around and we can kvetch about coming up with the 100 percent plan, but we are wasting time,” the Florida Republican told Fox News’ Neal Cavuto. “What I believe is this is the plan that gets us the 70 percent to 75 percent solution. Does it have everything that I with like to see there? Absolutely not.
“But I think that it gets to the core of us making sure that we don’t have any default on our debt — we do start to cut spending, we do cap spending,” said West, a member of the House Tea Party Caucus. “And we do get to a balanced budget amendment — as a matter of fact, we will have separate balanced budget amendment votes after the Boehner plan is passed in the House.”
 
Cavuto asked West whether backing the Boehner plan is a waste of time, as some critics have claimed it will be dead on arrival when it lands on the Senate floor.
 
“It is not a waste of time — and I think the most important thing that the American people should start asking themselves: What is the credibility of Harry Reid and the Senate Democrats?” West said. “You are talking about an individual and his Senate Democrat cohorts in 818 days — or 817 days — they have not passed a budget. That is the one constitutionally mandated thing they are supposed to do, and they keep talking about how everything is dead on arrival.
 
To Harry Reid: If you don’t have viable plan, then you need to pass what we will send over to you and not have a repeat of what you did last week when you tabled a cut, cap, and balance plan which would have given — this whole thing would have been ended. “You would have gotten the debt limit raised and we would have the spending control measures that the American people think are necessary.”

Rep. Ryan Explains: Reid Plan Relies on ‘War Gimmick’

House Budget Committee Chairman Paul Ryan says even though the Congressional Budget Office (CBO) has now scored Senate Majority Leader Harry Reid’s debt-reduction plan as cutting more spending upfront than the House GOP plan, it actually relies on a “war gimmick,” that there will be a surge and then savings realized when the United States leaves Afghanistan.
 
The Wisconsin Republican also said Wednesday on CNBC’s “The Kudlow Report” that House Speaker John Boehner’s plan has real cuts that will prevent the nation’s debt from rising.
 
“Well first of all Reid’s has a big gimmick in it — the war gimmick. We’re assuming that Afghanistan is going to be at surge levels for 10 years and then if we have a pullout that saves us a bunch of money — that’s really a gimmick,” Ryan said. “So what we have (with the Republican plan)are actual cuts that are real, that are not gimmick cuts — real cuts.”According to the CBO, the upfront cuts in Boehner’s plan are $917 billion over 10 years, while the Reid plan cuts $2.2 trillion. Ryan said Reid’s bill, however, “raises the debt limit right away by $2.4 trillion, but doesn’t have the kind of cuts to exceed that amount.”Host Lawrence Kudlow noted there was some debate over the amount of upfront guaranteed cuts in the Boehner plan and wondered why the debate was not centered on Ryan’s budget plan, where the amount of cuts were not in question.“We passed the Ryan plan — we passed the House Republican budget — that has passed the House,” Ryan said. “The Senate for two years hasn’t bothered trying to pass a budget — the president has yet to offer a budget to fix this problem.

“What did we do? We actually put it on paper, scored, and passed it,” he said. “So what we have here is if these $1.8 trillion in cuts don’t materialize then the debt limit does not go up. So we have the leverage of making sure that if the president wants his debt limit increased through the election — which is his big issue — then you have to have these cuts passed into law first. If they are not passed into law, then he doesn’t get the debt limit increase.”

 

House GOP Sets Vote on Debt Bill

House Republicans are pressing ahead with a vote on a newly modified plan to stave off an unprecedented government default, despite threat of White House veto.

Preview

A broken bully pulpit? Speeches like the one he gave Monday night are not boosting President Barack Obama’s poll numbers in key battleground states. Rather, they are dropping well past the comfort zone for any incumbent looking for reelection. (AP Photo)

Polls: Obama’s Popularity Plunging in 2012 ‘Battleground’ States

The common wisdom that the debt crisis is helping President Barack Obama’s re-election prospects is wrong. Obama is polling worse in key swing states like Ohio and Michigan than he is in national surveys, according to a series of new “battleground state” polls. Especially when pitted against GOP candidate Mitt Romney, Obama comes out losing states that are essential in any electoral math adding up to a presidential victory… FULL STORY
RNC Ad Depicts Dismal 2017 If Obama Re-elected

Kessler: Debt Fiasco Reveals “Pretend” President

Trump: Obama (amateur) Is ‘Now Totally Lost’

Rasmussen: Lawmakers Out for Selves, Not Country

What’s Wrong With Government Spending? (Today, almost everything!)

Democrats Need to Learn That When It Comes to Fiscal Issues, There …

Talking Points – Why a debt deal can’t get done by Bill O’Reilly

The reason the debt deal can’t get done is because of pressure on both President Obama and Speaker of the House John Boehner. Last Thursday, we went over the Tea Party objections to any debt compromise, and some of you were angry with that analysis (see more below). But as Charles Krauthammer reiterated Tuesday night, the Tea Party can be a problem when compromise becomes necessary.

President Obama has the same kind of problem from the far left. The insidious MoveOn organization is actually threatening any Democrat who doesn’t toe the far-left line, that is raise taxes and President Obama is also being intimidated by the far left:

(BEGIN VIDEO CLIP)(one of the most despicable men we can think of) BILL MAHER, HOST OF JERK REAL TIME: I just don’t get this giving away the store. I mean, I never thought he would be caving on the revenue side of it. I thought that was his line in the sand. And he has this reputation as a guy who is always caving in to the Republicans.

(still “dumb as soap” spewing scare tactic lines of B.S.)
REP. NANCY PELOSI, D-CALIF., why still? MINORITY LEADER: They want to destroy food safety, clean air, clean water, the Department of Education. They want to destroy your rights. They do not like government.

(and what do you expect from a, not “I”, but rather an outward “socialist”)
SEN. BERNIE SANDERS, I-VT.: There are millions of Americans who are deeply disappointed in the president, who cannot believe how weak he has been for whatever reason in negotiating with Republicans, and there is deep disappointment.(END VIDEO CLIP)

There may be deep disappointment in the less than American world of Bernie Sanders, but nearly two-thirds of the American public, according to the polls — two-thirds — want President Obama to get a deal done.

And the president’s image is taking an enormous hit. Not only are his poll numbers falling along with the Dow, but the National Journal reports that states like Ohio, Michigan, Iowa and New Hampshire, all won by Obama last time around, are now turning.

There are just 14 battleground states where the next presidential vote is really up for grabs, and most of those states are now leaning against Barack Obama. In fact, Mr. Rove predicts Republicans will win Indiana, Virginia, North Carolina, Ohio and Florida, and then will need just one more battleground state to defeat the president.

So if he’s correct, Barack Obama’s future in the White House is shaky to say the least. The president must know that, so he must walk away from the far left, just as Speaker Boehner has got to achieve compromises from the far right.

Independent Americans will decide the next presidential election, not MoveOn, not the Tea Party, and the independents want the debt chaos to stop. In the end, it is Mr. Obama who has the most to lose if compromise is not reached. Unless he wants to move on from the Oval Office, he’d better get a deal done.

Krauthammer on debt

BILL O’REILLY, HOST: In the “Impact” segment tonight: As I mentioned earlier this week, I am not going to get caught up in the “he said, she said” of the debt debate. Things are changing every 10 seconds, a very disturbing situation, as you know. Today, Fox News White House correspondent Ed Henry challenged White House spokesman Jay Carney.

(BEGIN VIDEO CLIP)

ED HENRY, FOX NEWS WHITE HOUSE CORRESPONDENT: What was the point of giving a prime-time address to the nation without an Obama plan and say neither of these other plans can work? Where is his plan?

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: I understand the idea that there is not an Obama plan is like…

HENRY: There is not one on paper. (CROSSTALK)

CARNEY: …that is point No. 1 on the talking points issued by the Republican Party. I get it. OK.

HENRY: No, no, no. This is not a talking point. No, no. Show us the plan. It’s not a talking point. That’s unfair.

(END VIDEO CLIP)

O’REILLY: Joining us now from Washington with his take on the political madness, Charles Krauthammer. So, let’s look ahead here. I mean, you saw Ed Henry, the new guy at the White House for us. He asked a valid question. I mean, President Obama goes on nationwide TV prime-time, disturbs some people out of their slumber, and he doesn’t have any plan. I was just saying to myself: Is this as absurd as it seems? Is it? Is it “The Twilight Zone”?

CHARLES KRAUTHAMMER, FOX NEWS CONTRIBUTOR: Well, I think the Obama administration, just that Jay Carney remark tells you how detached from reality they are. Here is Henry asking a perfectly logical question. You ask for time on national TV, you do that when you are launching an invasion or the Cuban missile crisis and then what do you do? You give a campaign speech and you don’t offer a plan. And Carney’s response is, “Oh, that’s a political attack. It’s a talking point.” It’s a logical question. The president has portrayed himself as the grown-up in the room and all these children are squabbling. He summons the members — the leaders of Congress to the White House on the tantrum he gave on Friday night, very imperiously as if he is the only one who’s acting in the national interest. Yet through all of this, through months and months of argument and debate and counter-argument, no plan. He doesn’t have a plan.

O’REILLY: Well, what do you think is going to happen in the next couple of days? Because we have about a week to go before the deadline of the debt ceiling, and I figure something is going to happen. That’s what all these pinheads say.

KRAUTHAMMER: Something has got to happen because otherwise we are going to go over a cliff. That is, it may not be August the 2nd. It could be August the 5th. At some point when you have a government that is borrowing 40 cents on every dollar it spends, if you withdraw the credit card, all hell breaks loose. It’s not going to be a default. I mean, we are going to be paying our creditors, no question about that. Everybody understands that. But it means we are going to have to have a lot of triage inside the country as to who gets what. Something is going to happen. I have been agitating for weeks in my column, on “Special Report,” for the Republicans to offer and pass a plan in the House.

(of course we must chime in here to point out that the House has repeatedly passed plans, maybe not specifically Krauthammer’s plan, but they have never the less passed the Ryan plan, the CC&B plan, and continue at the Democrats behest to rework more plans, and as for the Senate they have passed none, while President Obama’s is at worst non-existent, or at best is unknown!)

O’REILLY: They can’t. They can’t pass it. It seems that Boehner is being criticized.

KRAUTHAMMER: I’m not sure if they can.

O’REILLY: It’s close.

KRAUTHAMMER: He is getting criticism. I think this is a life or death decision by the Republicans. I think it would be catastrophic if Republicans were not to go with the Boehner plan at this point.

KRAUTHAMMER: If you are a conservative, you know that we’re overspending. We’re going into debt. The government is expanding at an alarming rate. It’s destroying everything around us. How do you stop it? The only way to stop it in our constitutional system is if you control the White House and the Congress. You cannot governor from one house of the Congress. You can’t even govern from one branch. All the Republicans and conservatives control now is half a branch. Under our system, you have got to have it all. That can only happen if you persuade the country next year in the election that we need smaller, more constitutional government. The case is strong. Obama is weak. The economy’s on the rocks.

Hamilton and public finance

by Michael McConnell, Senior Fellow, Hoover Institution
July 25, 2011
 
        The founder’s financial wisdom holds lessons for today’s debt crisis.

It is often forgotten that the main reason the Constitutional Convention met in 1787 was to resolve a financial crisis—one more serious even than ours of today. More than any other single objective, the United States Constitution was designed to provide long-term institutional solutions to the young nation’s fiscal woes. In this article, author Michael McConnell examines how Alexander Hamilton dealt with the financial problems of his time including how he used a properly funded national debt to be a national blessing.

A properly funded national debt, Hamilton wrote, “if not excessive, will be to us a national blessing.”

The Government Should Spend Less Money

The fight over the debt limit is really a fight over whether government should be bigger or smaller. Milton Friedman explains why it would be a good thing if government spent less money: Friedman More…

Tax Hikes Now and (Maybe) Spending Cuts in the Future (NO WAY!)

The Senate’s “Gang of Six” plan is not as balanced as the gang would have you believe. The Heritage Foundation’s Alison Acosta Fraser finds net tax increases of $3.4 trillion over ten years. Spending More…
 
Download PDF

What Would
Hayek Say?

 

Spending Cuts Aren’t That Hard to Find

Imposing spending caps, creating new commissions—such maneuvers are common to all the various debt ceiling plans and they all amount to leaving the spending cut decisions for future Congresses (and pr More… 

Some Taxpayers Already Pay More Than Their Fair Share!

The president, seemingly irrelevant at this point in the debt-ceiling debate, still talks about the need for “shared sacrifice”—i.e., higher taxes—to reduce federal budget deficits. The president want More…

The Long-Term Debt Problem Is a Health Care Entitlement Problem

Whatever Congress hashes out over the debt ceiling isn’t likely to fix the underlying source of the government’s long-term debt problem. This chart, produced by Yuval Levin based on CBO numbers, shows More…

Source: American Enterprise Institute

It is increasingly clear that Keynesian stimulus has failed to get the economy where it needs to be. So what exactly needs to be done in a post-stimulus world?  More…

After the Fall: Saving Capitalism from Wall Street—and Washington

Source: Encounter Books

Since the rumblings of the economic crisis began in 2007, Americans have suffered four years of fear, recession, and stagnation. The culprit is not free markets, but Washington policy. America can’t recover until its citizens understand these policy failures—a

More…

(Though we would point out that as it relates to the Tea Party looking to extreme, it is the left in this country that’s as extreme as it gets, so how worried should they really be? Regardless, O’Reilly’s points here are well taken. As to his National sales tax idea, it has a lot of merit, however it would need to be done with serious controls and limits in place, so set in stone that they could not be violated. Having both a NST and Income Tax, the risk would otherwise be too great for that to also spin out of control down the road, and for it to become as abusive as things are now from D.C.)

O’Reilly July 22nd: I Could Sort Out Debt Crisis ‘In a Day’ (1% National Sales Tax)

The tea party has to slow down in its bid to revolutionize America’s political landscape or it could make itself look too extreme, Fox News’ Bill O’Reilly said today. O’Reilly was speaking after President Barack Obama cited him in an Op-ed in USA Today as someone who agrees that revenues must be included in a deal to reduce the deficit.
“A balanced deficit deal that includes some new revenues isn’t just a Democratic position,” Obama wrote. “It’s a position that has been taken by everyone from Warren Buffett to Bill O’Reilly. “It’s a position that was taken this week by Democrats and Republicans in the Senate, who worked together on a promising plan of their own. And it’s been the position of every Democratic and Republican leader who has worked to reduce the deficit in their time, from Ronald Reagan to Bill Clinton.”O’Reilly did not dispute the president’s words specifically when he appeared on “America’s Newsroom” with Bill Hemmer this morning. “It’s not accurate in the sense that I’m advocating any tax rate hikes, and he didn’t say that,” he told Hemmer.O’Reilly said he wants to see a 1 percent national sales tax introduced and income tax loopholes plugged at the same time that federal income tax rates are brought down. “People would wind up with more money in their pockets,” he said. “The government would get more money because they would be taxing people more efficiently. “The underground economy in this country is a $1 trillion concern and that’s cash off the books — illegal alien payments, that kind of thing. If you lower the income tax rates and put in a national sales tax of 1 percent or so, your debt goes away.”O’Reilly, who claimed he could sort out the whole debt crisis “in a day,” said he had told Obama that. “It’s just so frustrating to sit on the sidelines and watch this,” he said, adding that people on the left are “killing themselves” by wanting a western European-style welfare state.

But he said the tea party hasn’t quite got it right, either, and needs to slow down. “I warned the tea party last night ‘If you’re looked upon by Americans as being as extreme like the far left is, you’re going to evaporate too. You’ve got to be reasonable here.’”

He said he wants the tea party to succeed, saying it is “absolutely necessary for this country,” but added, “If the tea party is deemed to be unreasonable and independent-minded Americans say, ‘you know what, we’re scared of them,’ then the whole thing may collapse.”

O’Reilly said he believes the debt crisis is real and politicians on both sides have to work out a deal on the debt ceiling. “People have got to stop and step back, because what we’re talking about here is a massive economic hit if these people continue to botch it in Washington.

“Some people don’t believe that — but some people didn’t believe this tsunami was coming either.”

Raise Taxes on the Poor?

The Libertarian July 26, 2011 by Richard A. Epstein

Yes. A flat tax could help solve the debt crisis.

 
(And finally, a somewhat contrarian, and yes -valid, viewpoint)

A ‘Debt Limit’ Compromise

July 19, 2011 by Richard A. Epstein (Peter and Kirsten Bedford Senior Fellow and member of the Property Rights, Freedom, and Prosperity Task Force)
Republicans must reconsider the “no new taxes” pledge.
Sometime soon, politicians in Washington DC will decide whether to lift the statutory limit on federal borrowing, the so-called ‘debt limit.’ In thinking about this monumental issue, it would be inappropriate to side completely with either the Democrats or the Republicans. The whole matter has careened so far out of control that the abundant blame for this unfortunate impasse has to be shared on both sides of the aisle.Nonetheless, before assigning blame, it is best to chart the correct course of action. Here, the first question is not how to fund government expenditures, but what in principle is the proper size of the federal government? It is not sufficient to simply argue that government is either too large or too small. Rather, the challenge is to take each class of expenditures separately, in order to determine whether the last dollar spent on any particular area produces a gain that is greater than the next best use of those dollars. It could be the case, therefore, that the overall size of government is too large, even if certain types of expenditures are too low.

Thus, although there is constant pressure on both sides of the aisle to cut defense spending, it seems that the current four percent of gross domestic product spent on defense is too low for a nation that faces dire threats around the world. An expenditure cut could easily lead to dangerous confrontations, requiring the nation to ramp up its military strength at great cost and in a desperate hurry.

At the same time, the present inefficiencies in defense spending need prompt correction. The proper function of the defense establishment is to defend the United States. It is not to raise labor costs, which it does by allowing civilian employees to join unions or by insisting that defense contractors meet various affirmative action quotas. Price and quality of service are the only two factors that should determine how the Department of Defense spends its money. Thus cutting the budget on the civilian side might in fact lead to more efficient military operations.

Unfortunately, by treating defense spending as a black box we are likely to continue along our present reckless path by cutting in the wrong places, no matter how the present budget crisis is resolved. On this issue, it is really up to the Democrats to confess their error on an entrenched set of employment and procurement policies that have been the bane of all labor markets, both public and private.

A similar drill is surely required for dealing with the far larger sums that are devoted to entitlement programs. These programs have, by common consent, grown beyond sustainable levels. Once again, a good place to start is by reforming inefficient labor policies that, for example, allow the unionization of hospital workers and other health care providers—positions that are explicitly protected in the misnamed Patient Protection and Affordable Care Act.

What in principle is the proper size of the federal government?

Beyond improving labor policies, the needed cuts must penetrate entitlements at their core. This awkward job cannot be done by confining the cuts to those who have yet to receive program benefits. The only form of immediate relief will come when some current recipients are forced to bear a larger portion of their own costs—itself a challenge that will generate a new set of deep divisions that may not break cleanly along party lines.

In grappling with these various government programs, we should not first ask how they should be to be funded—we should ask instead: what is the proper size of these programs? On this issue, it is clear that neither the Democrats nor the Republicans have kept faith with the key principle of sound government, which is the presumption that dollars used for ordinary goods and services go a lot further when the money is left in private hands.

The appalling waste of both the Bush and especially the Obama stimulus programs was based on the fatal Keynesian presumption that it makes sense for the government to make expenditures that everyone would deem wasteful, even farcical, if undertaken by private parties. It makes no sense for any private firm to hire workers first to dig holes and then to refill them. It makes no more sense to tax private firms an amount that allows government employees to undertake those same useless acts.

Protectionism is an equally foolish economic policy. The “Buy American” legislation that the Obama Administration built into its stimulus program represents a short-sighted policy that denies American consumers and firms that use of low priced goods and services from abroad that could make matters better at home. Equally pernicious are the mindless government regulations of private enterprise, which could be cut as an overdue cost saving measure.

The Republicans are on solid ground by insisting that shrinkage in the size of government is the key to any sustainable policy. But what is the best way to achieve the goal of smaller government? Start with the simple proposition that government can pay for its expenditures in three and only three ways. It can raise taxes; it can borrow money, which can be paid back only with taxes raised at some future time; or it can print more currency, at which point the rapid inflation cheapens the currency and thus works as an implicit tax on anyone who holds American dollars or any creditor (including creditors of the United States) whose debt is denominated in dollars.

Government can pay for its expenditures in only three ways, and all three forms of funding rely on either explicit or implicit taxes.

All three forms of government funding necessarily rely on either explicit or implicit taxes. The differences between these funding methods are all second order effects. If the size of government is not cut from its current unsustainable levels, it will not matter much whether the government defaults on its obligations today or two years down the road. Either way, government bankruptcy will create massive dislocations in both the economic and the political sphere.

On this view, Republican strategy to rail against all new taxes is a misguided negotiation position. The Republicans should break ranks with Grover Norquist’s tax advocacy group, Americans for Tax Reform, whose “no new taxes” pledge has been taken by many members of Congress.

The object of this pledge is to use the control on taxes to limit the size of government. So far, so good. But the means that Norquist champions are deficient for two reasons. First, the “no new taxes” pledge is too weak. Second, looking at only overall tax levels ignores the striking differences between various forms of taxation.

It is consistent with the pledge, for example, to raise the debt limit by letting the treasury borrow new money. Ultimately, those new obligations have to be paid off with either tax revenues or cheaper dollars, so that a “no new taxes” pledge that only addresses current taxes contains obvious loopholes.

The implications of this proposition are clear. First, Republicans should treat all three forms of government financing as functional equivalents, and thus push for that deal which, subject to the caveats raised above, works the greatest cut in total expenditures. Following this reasoning, it is better to cut expenditures by $5 trillion over the next decade and raise taxes by $1 trillion over that same period, than it is to cut expenditures by only $3 trillion, without any current tax increase.

On the second point, the Republicans should not only worry about the size of the total tax bill, but also its incidence. One point in the Norquist program is to “net out” tax increases in one area against tax reductions in another. Yet in principle this approach is far too crude, because it ignores the impact that any tax has on the overall economic position of the country. Thus if we cut out a real tax loophole (e.g. accelerated depreciation that systematically exceeds actual economic losses), and lower overall rates, both of these moves independently make sense, so that their combined effect is of course positive. But if we were to raise general tax levels in order to generate yet another unwarranted tax preference, the combination of the two moves is worse than allowing either of them separately. Looking at net effect ignores these allocative differences in changes in the tax law.

The Republicans should break ranks with Grover Norquist’s tax advocacy group, Americans for Tax Reform, and its “no new taxes” pledge.

That same point plays out in connection with the level of tax progressivity. The Democrats always equate tax fairness with steeper progressivity on the ground that the diminishing marginal utility of wealth makes it desirable to impose the taxes on the wealthiest individuals—those few who earn at least $250,000 per year.

If that one consideration were dominant, it would quickly lead to an equal incomes policy, regardless of differences in individual productivity and earnings. Clearly, even Democrats shrink away from that position, because at some point high tax rates will dull individual effort, which in turn will reduce tax revenues.

But how much progressivity is too much? Today, most Democrats set it higher than the current rates, which is way too high. Indeed, on this issue, my firm long-term conviction has been that a flat tax outperforms any system of progressive taxation for three reasons.

First, the flat tax is far easier to administer than any progressive system, which then has to decide what dollars of income are taxable to what persons in what period. Second, a flat tax produces the better incentives for higher output, which in turn translates into greater opportunities for all, given the higher rates of economic growth. And third, the flat tax cuts against the strong incentive for the bulk of the public, who currently pays no income taxes, to push for income tax increases on “the rich” in order to gain benefits for themselves.

These gains will lead to higher levels of growth, which in all likelihood will swamp the short-term distributional gains that entrance defenders of progressivity. Yet note that the “no new taxes” pledge is indifferent on the form of taxation so long as the various changes net out on some static model

The Republicans need to keep these fundamental truths in mind. Toward that end they should accept some tax increases, but fight hard to tie those increases to a flattening of the tax rates and to the largest possible increase in spending cuts. Starting from this framework, a tax deal should be possible with the Democrats, notwithstanding the philosophical gulf between the two parties. The current trajectory of taxation, regulation, deficits, and expenditures is unsustainable. With a bit of shrewd bargaining, the United States could take the first step in a long journey toward a return to fiscal and economic sanity. No general default will make that task any easier.


Richard A. Epstein, the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, is the Laurence A. Tisch Professor of Law, New York University Law School, and a senior lecturer at the University of Chicago. His areas of expertise include constitutional law, intellectual property, and property rights. His most recent books are The Case against the (grossly misnamed) Employee Free Choice Act (Hoover Press, 2009) and Supreme Neglect: How to Revive the Constitutional Protection for Private Property (Oxford Press, 2008).

Letters to the editor

OK, Raise Taxes–But Raise Them on Democrats

A better idea than what Richard Epstein proposes in his essay would be for the Republicans to propose tax hikes and eliminate deductions and credits that mainly hit Democrat areas and see how that goes over. For instance, the GOP could propose levying a hefty excise tax on all things related to the entertainment industry. The Republicans could also propose getting rid of special tax considerations for Hollywood. There are many other areas to consider, as well. Democrats like taxes, so the Republicans should make them pay them. Once the howls of fake outrage are over then the serious discussion on taxation and spending can begin. Its easy to be a liberal when you spend other peoples money. But when it comes out your pocketbook–not so much.

–Robert Olemberg

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