Today Senate Minority Leader Mitch McConnell reportedly “slammed the door” on tax rate increases, though he left the door wide open for tax increases by way of ending deductions. I’m not necessarily against simplifying the tax code by ending some deductions (though I’d prefer it in a revenue-neutral way), I honestly have no idea why we’re even talking about the revenue side of the equation, other than Democrats just want higher taxes as a matter of principle. Federal tax revenues have risen 19% since 2009, and we’re nearly back to 2007 levels of revenue.
But I digress. What’s interesting is that while Republicans haven’t taken revenue off the table, President Obama and Democrats have so far refused to talk spending cuts.
As the president and Congress hurtle toward a reckoning on the highest federal budget deficit in generations, Mr. Obama says he wants a “balanced” approach to restoring the nation’s fiscal order. But the high-profile public campaign he has been waging in recent days has focused almost entirely on the tax side of the equation, with scant talk about his priorities when it comes to curbing spending. …
In public statements since his re-election, he has barely discussed how he would pare back federal spending, focusing instead on the aspect of his plan that plays to his liberal base and involves all gain and no pain for 98 percent of taxpayers.
Republicans and even some Democrats have expressed frustration that Mr. Obama has avoided a serious public discussion on spending with barely a month until deep automatic budget cuts and tax increases are scheduled to take effect. While the president’s aides said it was important to engage the public on taxes, others say he has not prepared the country for the sacrifice that would come with lower spending.
“The problem is real,” said Erskine B. Bowles, who was co-chairman of Mr. Obama’s deficit reduction commission. “The solutions are painful, and there’s not going to be an easy way out of this.”
Spending is what is driving the nation’s debt problem. Federal revenues have gone up and down since the 1990′s, but not as a result of lowered tax rates so much as in reaction to economic conditions. Note that tax revenues continued to climb after the Bush tax cuts circa 2001 and 2003, but the major dips in tax revenues took place in 2001 (post 9/11 recession) and 2008 – 2009 (housing melt down).
We’ve ran up huge deficits during that time because, when revenues were growing, spending grew faster. And when revenues dropped, spending kept growing.
The only way to fix this problem is to stop spending so much money. We need dramatic, painful cuts in federal spending. There is no way around it.