A “balanced approach” to reducing the debt — I’m for it

President Obama ran for re-election advocating a “balanced approach” to dealing with our fiscal crisis. Now, our own John Hinderaker has proposed one — raise everyone’s taxes by letting the Bush-era tax cuts expire. You can’t get much more balanced than that.

However, I don’t favor raising anyone’s taxes within the current tax code structure, and I don’t think, as a political matter, that Republicans should push for an across-the-board tax hike. It’s tough enough for Republicans to win elections without borrowing Walter Mondale’s 1984 tax policy.

What, then, should Republicans do? They should favor a balanced approach to dealing with our fiscal crisis, and begin by demonstrating that what Obama has proposed doesn’t meet this description.

James Pethokoukis provides that demonstration. He shows that Obama’s new “balanced” debt plan consists of 73 percent tax hikes.

A balanced plan does, however, require some tax increases. And if Republicans wish (as I think they should) to raise taxes on as small a sub-set of taxpayers as possible, this leaves us roughly with Obama’s proposal to raise taxes on very high earners.

I believe that Republicans should be willing to do so, as part of a truly balanced debt reduction plan. Although I prefer the current 35 percent tax rate for the top tax bracket to a higher one, there is nothing sacred about that number or inherently evil about the 39.6 rate Obama has in mind. These are just numbers. Again, some numbers are better than others, but the difference between 35 percent and 39.6 percent isn’t worth building a religion around.

The major importance of the 4.6 percent difference, in the context of the current fiscal crisis and the impending expiration of the Bush-era cuts for all taxpayers, is the leverage it gives Republicans over Obama. They are in a strong position to demand a far more balanced deal than the one Obama has offered.

A deal in which tax increases make up anything close to 73 percent of debt reduction strategy isn’t going to cut it. As Pethokoukis notes, even Bill Clinton’s debt reduction plan was 2-1 in favor of spending cuts. Moreover, Pethokoukis points to a study finding that successful fiscal consolidations are heavy on spending cuts and light on tax hikes.

With this precedent on their side, Republicans should bargain hard. It was Obama who shrewdly introduced the concept of “balance” into this debate. Republicans now can shove it down his throat.

JOHN protests: “Borrowing Walter Mondale’s 1984 tax policy?!” Mon Dieu! Let’s note that Mondale proposed to increase the top marginal tax rate to 55%, something that even Barry O. hasn’t contemplated. Out loud, anyway. And my proposal is not just to concede the tax increase–relatively modest, by Mondale standards!–but to trade it for deep and immediate spending cuts and other consideration. If we can’t get the consideration, no tax increases. So, hey, don’t call me Fritz!