By Luke Brinker
This Sunday’s New York Times features results from a poll addressing issues related to the social safety net and the size of government. Unsurprisingly, the poll found that 85 percent of respondents supported increasing taxes on the wealthy as part of a deficit-reduction strategy. Much more striking, however, is that a substantial majority of respondents- 70 percent – endorsed increased taxation on everybody, not just the wealthy.
In late 2010, President Barack Obama extended the Bush-era tax cuts for an additional two years as part of a compromise with congressional Republicans. In exchange for increased stimulus (including the much-ballyhooed payroll tax cut), Obama agreed to renege on his 2008 campaign pledged to raise the rate of taxation for households earning above $250,000 annually. Obama has consistently supported maintaining the reduced rates for all other Americans, but the Center on Budget and Policy Priorities calculates that allowing the tax cuts for all income groups to expire would reduce the federal deficit by $3.9 trillion over ten years. As Ezra Klein has written, four-fifths of the total cost of the tax cuts went toward cuts for those earning less than $250,000. The Obama proposal to only extend most of the tax cuts would reduce the deficit more than the GOP proposal to extend all of them, but having everybody return to Clinton-era tax rates would do far more to put a hole in the deficit. Come December 31, 2012 – the date of the Bush tax cuts’ expiration – the best thing Congress and President Obama can do to reduce the deficit is simply to do nothing.