The Do-Nothing Path

Andrew Sullivan —  Apr 13 2011 @ 12:03pm


Annie Lowrey offers Congress a "meek, cowardly" solution to balancing the budget:

[D]oing nothing allows all kinds of fiscal changes that politicians generally abhor to take effect automatically. First, doing nothing means the Bush tax cuts would expire, as scheduled, at the end of next year. That would cause a moderately progressive tax hike, and one that hits most families, including the middle class. … Second, the Patient Protection and Affordable Care Act, Obama's health care law, would proceed without getting repealed or defunded. The CBO believes that the plan would bend health care's cost curve downward, wrestling the rate of health care inflation back toward the general rate of inflation. Third, doing nothing would mean that Medicare starts paying doctors low, low rates. Congress would not pass anymore of the regular "doc fixes" that keep reimbursements high. Nothing else happens. Almost magically, everything evens out.

Leonhardt has essentially the same piece today. The problem is that the GOP has been very good at defining the planned sunsetting of the Bush tax cuts as deliberate, pre-meditated raising of taxes.  In a nation of amnesiacs, that is more effective than you might think. And, as people actually experience them, that's how the sunsetting will feel.

The real force of the deficit-cutting inertia argument is that it gives Obama, and all those who see the necessity of a return to Clinton-era rates, more leverage in the debate. If talks fail, the president gets the tax hikes we desperately need.

In many ways, the fiscal question is now whether you care more about cutting the deficit than holding the Bush tax rates as sacrosanct.

I'm a Tory and want to balance the budget first, and do it more with spending cuts than tax rises. But you only have to look at the math to see that forgoing any tax increases above the Bush rate makes deficit- and debt-reduction politically impossible. And a 60-40 split between spending cuts and tax hikes seems to me a sweet spot for a moderate Dem or a sane GOPer (of whom there are now very very few) to land on.

Bowles-Simpson, moreover, (I keep wanting to shorten that to BS, but, for obvious reasons won't) offers the most pain-free way to get there – by slashing tax deductions and shelters to make the rate increases far less damaging economically and far less palpable politically.

There is a way forward. And by sticking to the most purist form of anti-tax conservatism, I suspect the GOP is taking itself out of the final deal.

(Chart from the Washington Monthly, via Politics)