So this year’s fiscal-policy code word is “balanced approach.” This means nothing more or less than higher taxes on high earners, business income, and capital gains.
Congressman Eric Cantor remarked at one point in the debt-ceiling debate that the Democrats (including Obama) were totally stuck on the idea of raising taxes. But Cantor stressed that they never presented an economic rationale for higher taxes. It was all about class warfare, pure and simple.
Class warfare is like catnip to progressives. The problem with class warfare is that it doesn’t give us growth and jobs. At least a few of the Democrats recognize that growth is a mandatory part of a fiscal-reform strategy (higher taxes and spending/entitlement cuts are the other two).
Remember the Bush tax-cut debate last year? Then, Democrats readily admitted the numbers: the Bush tax cuts on high earners were worth an estimated $700 billion in revenues over ten years, while the same cuts on everyone else were worth about $2.8 trillion.
You can raise taxes on high earners, but you don’t solve any economic problem that way. There just aren’t enough rich people to buy candy and bubble gum for everyone else. Plus, you kill job growth by wiping out their incentives to take on economic risk.
So it’s plain and obvious that the ONLY motivation that Obama and the Democrats have for their “balanced approach” is class envy. Economics has nothing to do with it.
Let’s challenge the Democrats on this one. If they’re so committed to the idea that we need higher taxes, then let them propose a broad-based, regressive increase: either a VAT, or a large payroll-tax rate increase (which Reagan also did).
Just do it, Democrats. You want higher taxes? Then propose higher taxes that really will reduce deficits while minimizing the effect on job creation. Otherwise, shut up.