Clinton-era income tax rates, we are told, were positively the best things ever to bless the American economy. Higher taxes yielded untold boons: budget surpluses; robust economic growth; intern White House pizza delivery—an unbroken chain of beneficent causality.
However, if current tax rates—curiously referred to as the Bush tax cuts more than a decade after passage—expire and we go the Full Clinton (in the economic sense), higher taxes will push the economy over a fiscal cliff and into another of those recessionary crises that Rahm Emanuel was so fond of not wasting a few years back.
What gives? After all, celebrated investor Warren Buffett assures us that, notwithstanding his contrary actions and counsel over fifty years, marginal tax rates have no effect on investment decision-making. And we have a $1.3 trillion annual federal budget gap to close somehow before Mr. Bernanke runs out of real assets to buy with imaginary money, not to mention some $60+ trillion in unfunded obligations looming just over the horizon.
If the Clinton tax rates were so great then why not have them all back, along with some modest reductions in the rate of spending growth courtesy of the Budget Control Act of 2011—the dreaded sequester? Let President Obama extoll the Clinton tax hikes to the 111 million taxpayers affected, including the 5 million added back onto the income tax rolls.
Negotiating with ourselves is not working, and the president is doing nothing substantive—unless you credit preparations for his $4 million three-week Hawaiian vacation. Mr. Obama hopes to splinter the Republican Party on a political cliff of his design, thereby fixing the ascendancy of his new New Deal coalition. Let’s disappoint him: why not link arms and jump?