Alan Simpson and Erskine Bowles recently launched Campaign to Fix the Debt, an initiative to urge both parties to cooperate on debt reduction. Noting that the current fiasco "is too large to cut our way out, it's too large to tax our way out and it's too large to grow our way out," the two remind us what's around the corner:
Let there be no question in your mind: the fiscal path our nation is on is simply not sustainable. The only responsible course of action is to replace the fiscal cliff with the framework that gradually and thoughtfully reduces the debt over the next decade and puts America's fiscal house in order.
Things might be looking up on that front, according to a recent WaPo report:
“This is a referendum on taxes,” said Rep. Tom Cole (R-Okla.), a senior member of the House Budget Committee. “If the president wins reelection, taxes are going up” for the nation’s wealthiest households, and “there’s not a lot we can do about that.”…
[I]f Obama wins, the GOP would have no leverage — political or procedural — to force him to abandon his pledge to raise taxes on family income over $250,000, according to senior Republicans in the House and the Senate.
So they are beginning to contemplate a compromise that would let taxes go up in exchange for Democratic concessions on GOP priorities.
Given that the candidate’s tax plans are likely to be a central point of discussion during October 3rd’s domestic policy debate, and that the President has spent the better part of the campaign so far highlighting the differences between him and Governor Romney on tax policy, I can’t see how you can argue that taxes will not be an issue in this election. Voters are being presented with a clear choice on the question of how to proceed on tax policy. If they end up re-electing President Obama, he is going to argue that it is in part an endorsement of his position, and he’d have merit in making that argument.
Meanwhile, Jared Bernstein examines what might happen if the upper-income tax cuts expire:
[I]n the really real world, the tax increase would be smart on a number of levels. Allowing these high-end tax cuts to expire raises about $1 trillion in new revenue over 10 years, breaks the Norquist strangle hold, and sends an important and salutary signal to markets and others worried that US policy makers have lost the capacity to undertake sane fiscal policy.