Fixing the economy: Are tax increases the solution?

President Obama has his work cut out for him on the President’s fiscal commission, and groups on both ends of the political spectrum are already saying the panel's unlikely to succeed. Are tax increases the way to go?

J. Scott Applewhite/AP
President Barack Obama meets with the National Commission on Fiscal Responsibility and Reform, a bipartisan panel tasked with finding ways to reduce federal deficits, as seen in this photo taken Tuesday, April 27, in the Roosevelt Room at the White House in Washington. Included in the photo are: the House Budget Committee's ranking Republican Rep. Paul Ryan R-Wis., Senate Budget Committee Chairman Sen. Kent Conrad, D-N.D., Commission Co-Chair Erskine Bowles, and Commission Co-Chair Alan Simpson.

A Wall Street Journal article by Corey Boles describes the tough work cut out for the President’s fiscal commission, meeting on Tuesday for the first time:

The commission must report back by Dec. 1 with suggestions about how to bring into line the federal government’s deteriorating finances. Groups representing both ends of the political spectrum are already decrying the panel as unlikely to succeed.

“We’re afraid the solutions they focus on will be entitlement cuts which are completely unwarranted,” Roger Hickey, co-director for the Campaign for America’s Future, an umbrella organization of liberal groups.

Brian Darling, director of Senate relations at the Heritage Foundation, a conservative think tank, said he feared the Obama administration would use the panel to justify tax increases.

“The bottom line is if you give politicians an easy way out they will take it,” Mr. Darling said. “And the easy way out in this case is tax increases and not cutting spending programs.”

The comments from both men illustrate the difficulties the panel’s members will face in trying to cobble together a bipartisan agreement…

Well, tax increases are certainly not the “easy way out.” Just ask the Democrats in Congress why they weren’t lining up to sign onto Senator Conrad’s budget resolution. I was told by a prominent aide to the Democratic leadership that this AP story by Andrew Taylor was “the article that killed the budget resolution.”

The WSJ story on the commission goes on to quote Concord’s Bob Bixby (based on this Concord blog post):

According to Robert Bixby, executive director of the Concord Coalition, a non-partisan fiscal watchdog, the panel should narrow its focus if its members want to succeed.

He said they should drop the goal set by Mr. Obama of seeking to bring the budget deficit down to around 3% of U.S. gross domestic product by 2015, something Mr. Bixby said was overly focused on short-termism.

“They might have the greatest success with social security,” Mr. Bixby said. “That would be wildly successful by modern standards.”

…but it left out the best part of the Concord statement (via blog) regarding Social Security (emphasis added):

They could begin with Social Security, which oddly enough has gone from being the “third rail of American politics” to the low-hanging fruit. Everyone knows what needs to be done but no one wants to do it. The commission could have a powerful effect by making an obvious recommendation to phase-in benefit reductions and increase dedicated revenues.

Let’s face it: the President’s commission isn’t going to find “easy choices.” (If there were such truly “low-hanging fruit”, it would have already been picked.) Nope, they’re going to have to settle for the “relatively easy” among a universe of sufficient choices, all of which are pretty hard.

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