Debt and Taxes
Via McClatchy: Debt limit stalemate forces new look at tax hike debate.
Dueling Democrats and Republicans have squared off in past similar talks over shrinking federal budget deficits. From President Ronald Reagan vs. Democratic House Speaker Tip O’Neil to President Bill Clinton against Republican House Speaker Newt Gingrich, the head-banging ritual is a time-honored tradition.
And it hasn’t always been pretty, as the government shutdowns of 1995-96 attest.
In the end, in the past, they always reached a compromise, with both sides accepting spending cuts and tax increases they didn’t like.
The most interesting part of the story is the chart below, which demonstrates a correlations between tax increases and deficit reduction. And yes, caveats about simplistic cause and effect relationship apply.
There is, however, a general lesson worthy of consideration here: we have had a deficit/debt problem for a while and we have dealt with it over time with a mix of spending and tax policies. To pretend like we are a point where this is no longer the case is pure fantasy, if the goal is really about fixing fiscal problems.
Click the link at the top of the post to access a larger version of the graphic.