Via Mediaite, “balanced approach” is Obama’s Orwellian term for selling tax hikes to the public as a condition of spending cuts even though there’s nothing remotely balanced about our fiscal problems. Spend 10 seconds looking at the graphs in Yuval Levin’s new post at the Corner. That’s the reality that the “balanced approach” pretends to address. As Levin said in another post today, “The fiscal trajectory of our welfare state is not sustainable, no matter how much taxes go up.”
But okay. The left’s new talking point, pushed by The One himself, is that they absolutely positively won’t negotiate over the debt ceiling. No one believes that, but fine. Supposedly, if the GOP wants spending cuts, the debt ceiling is off the table and the price will be additional revenue. One question: Where’s that new revenue coming from? I can’t figure it out. Neither can Megan McArdle:
For starters, there’s a matter of timing. President Obama just successfully raised taxes on the rich. Is he going to go back and do it again in a few months? I’m not sure about the optics here: while I think that a tax increase on the rich was popular and inevitable, I don’t think that Democrats will do well to position themselves as the party that does nothing but demand more tax increases, even on rich people. Moreover, each successive tax increase is likely to be less popular than the last, precisely because the most politically popular increases inevitably get passed first. A return to the Clinton-era tax levels on people who make more than $450,000 a year is, politically speaking, a no-brainer. A further hike will peel off a few voters who just wanted the rich to pay their “fair share” and now feel content. The third hike will be pushing rates close to 50%, if it is to raise any money at all. That seems to be pushing pretty far past most Americans’ ideas about what tax rates ought to be…
When you look at the actual proposals Democrats talk about, they’re trivial. Things like lengthening the depreciation schedule for corporate jets, which doesn’t raise much in the short term, and raises almost nothing in the long term, because while companies get a smaller depreciation and amortization deduction for the first few years, that just means they get a bigger one later. Or ending the immediate expensing of drilling costs, a deduction that the major oil companies lost years ago, so that you’re basically just pulling pennies out of wildcatters.
There are bolder things they could do in lieu of raising rates again, like eliminating deductions or enacting a VAT, but that gets them into squeezing the middle class and that’s not the way this game is played. Those would be viable options if this were about raising revenue, but revenue and deficit reduction have never been the core of Obama’s tax messaging. (The final deal ended up raising less revenue than Boehner offered O during their negotiations, in fact.) The core is “fairness” and the middle class are already paying their “fair share” per the Democrats’ acquiescence last night in making the Bush tax cuts permanent for everyone earning less than $450K. Tax hikes are for rich people — except for the huge hit you and I took yesterday on the payroll tax — so presumably the “balanced approach” that Debbie Downer’s talking about here vis-a-vis the debt ceiling will have to target the rich again. But how? Cancel the tax exemption for muni bonds and let local governments wither? Hike capital gains taxes while the economy continues to lurch along? The whole reason McConnell got Obama and Biden to agree to a $450,000 threshold for new tax hikes instead of the $250,000 one that O preferred is because the White House feared congressional Democrats would go wobbly if the GOP dug in and hammered them during a post-cliff standoff for being tax vampires. If Obama demands further taxes on the rich during the debt-ceiling negotiations, and then further taxes after that as part of the next fiscal clusterfark, how many Dems will stick with him as public perceptions start to sour? Realistically, the Democrats had more fiscal leverage over the past two months than they’re likely to have over the next two years and all they got from it was something like $60 billion a year in extra revenue when we’re running trillion-dollar deficits. If that’s their best showing even when everything’s breaking their way, what does O think he’s getting in March? Or am I giving him and Wasserman-Schultz too much credit in thinking they’re interested in anything deeper than the “balanced approach” soundbite here?