They're Here To Raise Taxes
July 27, 2010 -- On both sides of the aisle, lawmakers are coming to terms with hard political fact: services are going to have to be cut and taxes are going to have to go up to keep the $13 trillion-plus national debt from skyrocketing into infinity and beyond.
Even some leading Republicans have said in recent days they expect that a debt reduction plan will include a "revenue" element. That means taxes.
It turns out the national debt, when you factor in the promised benefits of Social Security and Medicare versus what those programs are expected to bring in, is much higher than the $13 trillion national debt – between $61 and $106 trillion, depending on whom you talk to.
The long-term benefits are going to have to be cut. Or taxes are going to have to go up. Probably both.
"To achieve fiscal sustainability we are going to have to accept higher tax burdens than we have enjoyed in the past. The challenge will be to adopt those revenue enhancing measures that are most compatible with economic growth and equity," wrote Robert Reischauer, President of the Urban Institute, in testimony prepared for President Obama's debt reduction commission, which is studying ways to deal with the debt.
Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, says there is a "fundamental disconnect " between what people expect from the government and what they expect to give the government.
Americans want services and entitlements from the government, but they do not, in large part, want to pay higher taxes for them.
There are two tax arguments on the horizon. In the short term, Democrats are poised to allow tax cuts enacted by President Bush lapse next year for the wealthiest Americans. Treasury Secretary Timothy Geithner made that argument to Jake Tapper on "This Week" last Sunday.
Republicans, in particular, will argue that taxes should not be raised in a time of economic peril. Democrats, for their part, argue the same about emergency spending. Democrats likely will come under fire from their base if there are Social Security or Medicare cuts. For proof, watch the combative and entertaining debate in a hallway between commission member and former Republican Senator Alan Simpson and a liberal journalist. Watch it here.
