Obama's very big, brand-new idea on entitlement reform is ...

The Wall Street Journal offers a sneak peek at the Barack Obama plan to balance the budget and cut entitlement spending, but it’s hardly an exclusive.  It’s more of a rehash of last year’s argument on fiscal policy:

President Barack Obama will lay out his plan for reducing the nation’s deficit Wednesday, belatedly entering a fight over the nation’s long-term financial future. But in addition to suggesting cuts—the current focus of debate—the White House looks set to aim its firepower on a more divisive topic: taxes.

In a speech Wednesday, Mr. Obama will propose cuts to entitlement programs, including Medicare and Medicaid, and changes to Social Security, a discussion he has largely left to Democrats and Republicans in Congress. He also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy.

“Every corner of the federal government has to be looked at here,” David Plouffe, a senior White House adviser, said Sunday in one of multiple television appearances. “Revenues are going to have to be part of this,” he said, referring to tax increases.

Didn’t we already have this fight?  Obama agreed to postpone an income-tax hike on the higher bracket until the end of 2012, a deal that made sense for him for two reasons.  First, it allowed some time for people to relax and allow investment to flow before arguing over income and capital gains again, which would have strengthened the economy a little ahead of the 2012 elections.  Obama clearly wanted to gain some economic traction before lowering the boom again, and the new timing would have allowed Congress to fight over the tax hikes in the aftermath of national elections instead of before them.

But there’s another problem with pushing for these tax hikes besides politics … basic math.  The tax hikes won’t solve the problem, and will probably make it worse:

Eliminating the Bush tax cuts for the highest earners, however, will only put a small dent in the projected deficit.

Republicans contend that raising top rates would hurt small businesses and cut into cash that might otherwise turn into consumer spending. Mr. Ryan said on NBC’s “Meet the Press” Sunday that “If you go down the tax increase path you’re sacrificing the economy.”

We don’t have a revenue problem, or at least not one unrelated to the economic turndown, which has resulted in much lower tax receipts than estimated.  We have a spending problem, one that would only get solved through massive tax hikes across the entire spectrum of taxpayers.  Those kinds of new taxes would dampen economic activity and come up short on revenue.  Furthermore, as the debate in December showed, people understand that we need to encourage private-sector investment to grow an economy rather than have the public sector seize more and more capital.  Even without the seizure — the money all came from borrowing, adding to the debt — the $800 billion Porkulus did nothing to correct unemployment and had no permanent effect on the economy.

If Obama’s big, new Budget 2.0 rollout consists of the same tax hikes he gave up in December, the White House shouldn’t be terribly surprised to see it received with the same enthusiasm as Democrats who ran on that policy in the midterm election.