Why We Must Do What Reagan Did

Reports are that the budget talks are falling apart. The Democrats have agreed to several trillion in budget cuts. But the GOP is refusing to budge even a little bit on taxation.

If I read the reports correctly, we would get something like five dollars in spending cuts for every dollar in tax increases. This is far better deal than we got under Reagan, Bush 41 or Clinton. The GOP should hold out as long as they can. But in the end, the federal government can not meet its existing commitments on 15% of the GDP. And the economic effects of large deficits or a default dwarf those of a tax increase.

The refusal to contemplate any tax increases illustrates the difference between talking and governing. We have a democratic Senate and White House. We can not wait until 2013 to solve this problem, even assuming the GOP would win both houses and that they would exercise the spending discipline they failed to exercise from 2000-2006. Holding our breath until we turn blue is not an option. Shutting down the government or defaulting is not going to generate an angry mob marching on Washington (something like 60% favor a combination of spending cuts and tax increases). The GOP simply has to cut a deal: preferably one that broadens the tax base rather than raises marginal rates. They can then use late 2011 and 2012 to push for a gigantic overhaul of the tax system (as Reagan did). If they want to cut taxes, make it an issue in the 2012 election.

Yes, that’s a compromise. But that’s how government works. We’re not going to get everything we want. We’re winning, getting unprecedented budget concessions that will shrink the size of government. Now is not the time to piss that away.

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  1. InsipiD

    The big problem with that is that a tax increase right now stands a near 100% chance of stunting economic growth, of which we have none.

    There is no reason for our government to be taking up 15% of the GDP and spending 20. Both numbers are so high as to be absurd. That said, if our obligations can’t be met with 15, then it’s the obligations that need work, not the 15. Backtrack to the last year that would’ve had a surplus at the current level of revenue, and you find that it’s 2003. With 2003’s budget and today’s revenue, we’d break even. It seems improbable that a way to reduce spending to that level couldn’t be found if everyone would cooperate. Allowing the Democrats to force anything to remain over 2008 levels is a recipe for GOP irrelevance. If they can’t do more to keep Democrats under control than that, they’ll never have a majority again and don’t deserve to.

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  2. Dave D

    The problem I have is that those “several trillion” in tax cuts are probably spread over at LEAST 10 years and heavily back-loaded for the next administration to modify, yet the tax increases will be immediate, irrevocable and annual. Why can’t these idiots think interms an annual budget with +/- items with the goal of balancing the damned thing, just like all businesses MUST do?

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  3. AlexInCT

    The big problem with that is that a tax increase right now stands a near 100% chance of stunting economic growth, of which we have none.

    Not to mention that this will simply serve to let the democrats increase spending almost immediately and those tax cuts, not tacked to happen for decades, will simply never happen. No effing way they get to raise taxes with these sort of deals. Balanced budget first and immediately hacking at least 1 trillion in spending, followed by taxes that are all earmarked to bringing down debt and nothing else. No new spending period on this vote buying wealth redistribution nonsense ever again and no new taxes for that. This shit helps nobody but the power hungry politicians.

    There is no reason for our government to be taking up 15% of the GDP and spending 20.

    Buying votes and power. That’s it.

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  4. Miguelito

    That said, if our obligations can’t be met with 15, then it’s the obligations that need work, not the 15.

    Every time they talk about “mandatory” spending and how they can’t touch most of the largest chunks in the budget, I want to throttle someone. That claim is complete bullshit. It’s only “mandatory” because a past congress said so, which means it can be changed if necessary. The problem is, very few have the balls to step up and point out that the entitlements are what’s killing us long term.

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