?Higher tax rates do not necessarily lead to more revenue. Recent history has often shown just the opposite.? Thank Sen. Jon Kyl for voicing the committed supply-side position here. And, in a technical sense, it?s true. You can imagine a world where tax cuts increases revenues. But that?s a world where marginal tax rates are 95 percent, not 35 percent. As Bruce Bartlett details, in our world, raising taxes raises revenue. And Republicans know it. That?s why Rep. Paul Ryan ? as serious a supply-side as you?ll find ? is calling a further tax cut on employers ?a sugar high? rather than ?a responsible effort to reduce future deficits.?
?I don?t believe now is the time to raise taxes in light of our current economic situation.? Actually, this argument, which comes from House Majority Leader Eric Cantor, is correct. But it applies with equal force to spending cuts. Just ask the Congressional Budget Office, which says that ?cuts in government spending or increases in taxes during the next few years would by themselves reduce output in employment relative to what would otherwise happen.? Tax hikes and spending cuts hurt the recovery in the same way: They suck demand out of an economy that has too little of it anyway. In a perfect world, we wouldn?t begin reducing the deficit until the recovery has clearly taken hold. But Cantor opposes any such delay. If he believed what he was saying about tax hikes, he wouldn?t want to start reducing the deficit till 2013 or 2014.
?The suggestion here is that this is all just some big quid pro quo exercise between the two parties. This is dangerous, and it?s wrong.? That?s Senate Minority Leader Mitch McConnell dismissing the idea that this is some sort of negotiation as opposed to a hostage situation. But a few weeks ago, McConnell was singing a very different tune.
?I actually think it would be easier to pass a comprehensive plan,? he said. ?Ronald Reagan and Tip O?Neill fixed Social Security in 1983. It?s lasted for a generation. Reagan carried 49 of 50 states the next year. They did it together. Reagan and O?Neill did tax reform in 1986, Bill Clinton and Republicans did welfare reform in 1996, and Bill Clinton and Republicans actually balanced the budget for a number of years in the late 1990s.? Aside from welfare reform, every single one of the deals McConnell mentions exchanged spending cuts for tax increases ? the very deal McConnell has ruled out in this case.
Source: http://feeds.washingtonpost.com/click.phdo?i=4e11c33c787ae07262f07d128ca7f41d
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