It might not be a full-fledged meme change, but the idea that tax increases could really be on tap has been percolating in the punditocracy—and is starting to make its move to the news pages.
Today’s evidence comes in a NYT profile of Alan Simpson, the plain-talking former senator from Wyoming tapped by President Obama to be the Republican co-chair of his fiscal commission.
As Jackie Calmes explains:
The Republican Party’s insistence that no real Republican would even consider raising taxes is a big reason that many people believe the president’s panel will never agree by December on a bipartisan multiyear plan to narrow the growing gap between spending and revenues.
It’s also, we’d say, the reason the commission has been met with a collective shrug by the business press. It’s true that the commission hasn’t done much yet—the Republican members of the panel were just named last week.
But Simpson doesn’t arrive with the fierce antitax stance of many of his GOP peers. And, as the Times piece points out, “it is a measure of the building concern about the nation’s fiscal future that some Republicans outside Congress are beginning to challenge the party’s antitax orthodoxy.”
It would be better here if Calmes named a few names. But there is this helpful context about how both parties have staked out their positions, and how some movement could actually be possible:
Many in the Democratic Party are as adamant in opposing reductions in Medicare and Medicaid — the programs that will do the most to drive the deficit ever higher in coming years — as most Republicans are in ruling out tax increases. Yet led by the White House, Democrats appear open to some future cost-cutting — if it is balanced with tax increases to minimize the pain of the spending reduction.
And on the Republican side some conservative economists and corporate executives are pushing for just such a balanced package, concluding that an aging population and ever-rising health care costs guarantee deficits too big to control by spending cuts alone.
The commission can succeed, of course, only if it comes up with solutions that Congress and the White House accept. For now, political leaders in both parties are still in denial about what the solution will entail. To be fair, so is much of the public.
What needs to happen? Spending will need to be cut, and taxes will need to rise. They won’t need to rise just on households making more than $250,000, as Mr. Obama has suggested. They will probably need to rise on your household, however much you make.
Perhaps more telling is a recent National Journal column from Clive Crook entitled, “Get Used To It: Taxes Are Going Up.”
Crook’s politics are hard to describe, and he seems to have struggled to end up where he is in the tax debate, conceding that the notion of higher taxes is “unthinkable. Nonetheless, it’s coming.”
If the U.S. is unlucky, sentiment in financial markets will change abruptly, leaving no time for an orderly fiscal correction. This is unsustainable à la Grecque. But whether the change is gradual or sudden, rest assured that higher taxes are unavoidable. The long-term fiscal gap is just too big for spending cuts alone, desirable as they may be as part of the solution, to do the job.
So get used to the idea. Taxes are going up — a lot. The only question is, which taxes?
There are countless stupid ways to raise more tax revenue but really just three intelligent ways. First, introduce a carbon tax; second, broaden the base of the income tax; third, design a national sales or value-added tax. In principle, each by itself, carried to an extreme, could close the gap. But it would be better to combine two or even all three approaches so that the rates of each tax would be lower for any amount of revenue raised.