January 14, 2013

Permanent tax cuts pave the way for fiscal discipline

CHICKASHA — During the 2011 debt ceiling debate, President Obama famously declared that the government should "eat our peas" and raise the debt ceiling with no strings attached.  But it is the president who needs to get comfortable with the idea of eating not only peas but carrots and spinach, as well.  Now that Congress has made the Bush-era tax cuts permanent for 98 percent of American workers, tax rate increases are off the menu.  The president's only options for reducing the deficit are spending cuts, entitlement reform and tax reform.

A combination of these three solutions was always the only path toward a balanced budget, yet President Obama and a complicit media have managed to obscure that reality for the first four years of his presidency by focusing on taxes. The president was in a unique position due to the temporary status of the tax rates in place when he took office.  With the tax cuts set to expire in 2010, the president could achieve his tax hikes without lifting a finger and made it clear that this was his goal.  House Republicans succeeded in blocking the 2010 increases with a two-year extension, setting up the fiscal cliff debate when the rates were scheduled to run out again in 2012.  This time, we managed to make the bulk of the tax relief permanent.

Securing the tax rates permanently is enormously consequential.  It changes the terms of the debate.  With the tax issue resolved, the president can no longer promise to reduce the debt through revenue increases.  His administration will be forced to engage in an adult conversation about spending.       

The next 90 days guarantee at least three opportunities to have that discussion.  Sequestration -- the automatic, across-the-board spending cuts that fall disproportionately on the military -- is scheduled for legislative action in two months.  The temporary continuing resolution under which the government has been funded expires in March.  And at some point in the next few weeks, we will hit the debt ceiling.  When these same budget challenges arose in his first term, President Obama automatically proposed  tax increases while House Republicans succeeded in enacting historic spending cuts.  The fiscal debates this year stand an even better chance of being productive now that the president has been deprived of his default solution to any problem.

For four years, President Obama has dodged responsibility for the economy by blaming his predecessor and Congress, refusing to put forth serious plans to balance the budget and declining to negotiate in good faith with Republican leadership.  The budget deadlines approaching in the first three months of the new year provide the opportunity to achieve significant progress on spending reductions and entitlement reform.  Let's hope the president has resolved to be a participant, not an obstacle.

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