Republicans in Congress refuse to allow any revenue increases to be included in a plan to reduce the deficit and raise the debt limit. They are wrong.
Republicans recently conducted a study on how to best reduce deficits. It found that the most successful programs tend to be composed of 85% spending cuts and 15% revenue increases. One of President Obama’s recent offers to compromise was comprised of 83% spending cuts, almost exactly the ideal ratio identified by the Republicans’ own study. The Republicans rejected it.
Recent experience also supports the conclusion that the best plan would include some revenue increases. A year ago, Britain implemented a plan to reduce its budget deficit (which was more troubling than America’s). The plan, implemented by a conservative government, included both spending cuts and revenue increases. It has largely worked. It has shored up Britain’s credit rating.
Not only does data and recent experience support the case for some revenue increases, but even the American public understands the point. A Gallup poll conducted this week indicates that only 20% of Americans support a plan that reduces the deficit with spending cuts alone. A whopping 73% would include at least some revenue increases in the plan.
I have dedicated this space to the goal of recognizing the merits of competing viewpoints. However, sometimes one side is simply wrong. Any objective analysis, whether based on data, experience or poll numbers, would point to solving the deficit problem with a combination of spending cuts and revenue increases. The only plausible explanation for the Republicans’ refusal to allow an increase in revenue is a dogged adherence to philosophical Republicanism.
In that philosophical world, Ayn Rand is President. American revenue is not at a historical low (which it is, see chart). It is not low by world standards (which it is). Instead taxes should always be lowered. Indeed, in that world, President Reagan did not increase revenue (which he did), and the current deficit is all Obama’s fault (even though the Bush tax cuts, the Bush prescription drug plan and the wars in Iraq and Afghanistan account for much of it).
Hopefully, someone will soon tell Republicans in Congress that their fantasy world doesn’t exist.