In an effort to minimize the public outrage over Obama’s tax proposal, Democrats are packaging the tax hikes as a mere reinstatement of the Clinton-era rates. After all, everyone knows that the ‘90s conjure up an image of peace and prosperity; why not invoke the nostalgia?
For one thing, they are obfuscating the fact that the Obamacare tax increases will take effect in just one month. Together with those new taxes, the rich will be paying a lot more than they did during the Clinton years. But why not make the following deal. Al right, Democrats, you feel that we need to raise taxes on the top 2%, and that 50% of the income tax burden is not enough for them? Then let’s also revert back to the Clinton-era spending levels.
In FY 2001, the last budget year of the Clinton Administration, revenues were $1.9 trillion and outlays checked in at $1.86 trillion. For FY 2013, if all the tax rates remain the same and the entire fiscal cliff sequester is avoided, revenues will top $2.583 trillion and outlays will be $3.62 trillion. Even if we factor in the CPI, revenues in 2001 would have been $2.48 trillion in today’s dollars; outlays – $2.43 trillion.
Hence, even as revenues are roughly the same as they were in 2001, spending has increased by $1.2 trillion. The reality is that we could never raise enough taxes to keep up with the growth of government unless we confiscate almost all of the wealth from the rich and permanently kill the economy. Obama’s $1.6 trillion tax hike is certainly not enough to cover Obamacare, his new spending proposals, and the at least $80 trillion long-term entitlement liability.
Nonetheless, compromise always requires one side to give in on something dumb. So in the spirit of cooperation and bipartisanship, why don’t we make the following deal: We’ll agree to raise taxes on the rich in return for Democrats agreeing to reduce our spending from $3.6 trillion (and rapidly increasing to over $4 trillion in the next few years) to $2.4 trillion. Yes, let’s bring back those glory days of Clinton’s presidency.
This is how you negotiate, even when you’re open to caving on one demand from the other side. Why are Republicans speaking incessantly of putting revenues on the table without demanding Democrats put real cuts (not baseline cuts, which both parties are suggesting) on the table? Why are they reluctant to demand anything transformational for breaking their pledge?
Come on Boehner; come on Cantor, we know you have the ability to play hardball. Just ask conservatives.
Cross-posted from The Madison Project