by Dustin Siggins | June 9, 2012 12:49 am
On Wednesday, White House Press Secretary Jay Carney said[1] the President would not extend current marginal tax rates for those Americans who make $250,000 or more annually, even on a temporary basis. With major debt ceiling, sequestration and tax policy debates on the horizon, should conservatives call the President’s bluff on the matter? Or should they try to undermine the President’s self-proclaimed “balanced approach” preference to deficit reduction by combining major spending cuts with tax increases?
There are strong arguments to both sides. To show how unserious the President is on actual deficit reduction outside of his rhetoric, Republicans could use the media to hold the President to his oft-broken promise of a “balanced approach” by saying if he wants three-quarters of a trillion dollars in tax increases we want nine or ten times that amount in spending reductions. I outlined[2] one potential approach to this strategy soon after Carney’s comments.
The weakness to this strategy is obvious: while it would highlight the President’s unserious policy platform for the American people (after all, interest payment savings plus the full tax increases would only equate to about 1.88% of the next decade’s spending[3]), and highlight the more responsible nature of conservatives when it comes to both principles and balancing the budget, it is philosophically and practically antithetical to conservatives to take more money from honest, hard-working citizens to pay for Congress’ irresponsible fiscal habits. Furthermore, why trust Democrats when history shows deals that include spending cuts and tax increases tend to ignore the former and enforce the latter?
The other approach is to call the President’s bluff. To take from this piece[4] — written months prior to last year’s debt ceiling debacle — conservatives could either call for major spending reductions and tax reform in exchange for raising the debt ceiling or simply state they want a balanced budget so the hike never has to take place.
It is my view that conservatives should call the President’s bluff and tell Democrats we want two things if they really want a debt ceiling hike and avoidance of sequestration: First, spending reductions of at least $600 billion annually for ten years — including medium reductions in the Department of Defense and aggressive entitlement reforms — and at least $100 billion annually in tax loophole closures and equivalently lower income tax rates. Second, we want a balanced budget by the time the 2014 fiscal year starts. If we don’t have a public promise by Obama and Reid (in addition to signed legislation) for all of these goals by the time the day of the debt ceiling arrives, we default on our debt. Plain and simple.
The weakness of this approach would be the media’s predictable reaction — which will almost certainly include accusations of “hostage-taking” and intransigence on the part of conservatives. We would need an effective media strategy to deal with this, with a focus on three areas:
Of course, conservatives could always hold the line completely and not raise the debt ceiling. However, I think that would eliminate what could very well be the last chance for aggressive phased — as opposed to completely abrupt — spending and tax reforms before we hit a financial crisis. This crisis, which could very well include high inflation, higher unemployment and severely reduced retirement programs, is likely to arrive in the next two to four years. It would also give the media and Democrats too easy an opportunity to demagogue us and sway the American people against the changes necessary for the future of the nation.
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