Right-Wing Media Attack Revenue Increases As Solution To Default Crisis -- Conservative Economists Disagree


Conservative media have remained adamantly opposed to any revenue increases when covering the current negotiations over the looming default crisis. In fact, several prominent conservative economists disagree and have said that new revenue should be part of an agreement.

Right-Wing Media Attack Tax Increases As Part Of Debt Deal

Erickson: Dem's "Moral Case For Tax Increases" Is "What Happens When We Debase Morality." In a June 28 post on the conservative blog Red State, CNN contributor Erick Erickson wrote:

The Democrats, in particular Joe Biden and Barack Obama, are out to make the moral case for tax increases. They claim the Republican position is immoral.

This is what happens when we debase morality in our American political culture.


Republicans arguing that the government should let hard working Americans keep their own money is not an immoral argument to make -- particularly given how ineffective and inefficient government use of that money would be compared to private enterprise and non-profits.

For Barack Obama and Joe Biden to make this a case of morality is a reflection of their weak moral compass. [Red State, 6/28/11]

NRO: "A Tax Increase Is The Last Thing The Economy Needs." A June 28 post on National Review Online's blog The Corner stated:

The Democrats think they can address these problems by raising taxes. But today's second must-read op-ed, this one from James Pethokoukis of Reuters, helps us see why a tax increase is the last thing the economy needs.


How to achieve dramatically improved economic growth is, of course, no simple question. But we can be pretty sure that tax increases on investors and job creators are not the way.

Republicans should champion a wholesale tax reform that includes the elimination of most tax preferences to make a significant rate reduction possible. Such a reform could also yield some modest additional federal revenue (and the growth it could enable could too). But they should adamantly oppose targeted tax increases intended to stoke class resentment that end up raising yet more obstacles to productivity and prosperity. [National Review Online, 6/28/11]

Huckabee: When The Wealthy "Get Taxed, It's Not Going To Mean That The Middle Class Improves." During the June 24 broadcast of Fox News' Your World with Neil Cavuto, guest and Fox News host Mike Huckabee said:

MIKE HUCKABEE: The Democrats honestly believe that you ought to tax people more, that we just aren't paying enough. They ignore the fact that half the people in the country don't pay any tax at all at the federal level, zero.

NEIL CAVUTO: Right. Right.

HUCKABEE: They have no skin in the game. Do they want the rich people to get taxed? Of course they do.

What they don't understand is, when they get taxed, it's not going to mean that the middle class improves. It means that the wealthy people simply do things that will cause the middle class to lose income and lose ground, like jobs, like extra things.

Remember when Bill Clinton said, let's have that luxury tax; we're going to hit the yacht owners and the airplane owners?


HUCKABEE: You know got hurt? It wasn't the people that were in the yachts.

CAVUTO: The people who built the yachts.

HUCKABEE: The people that built the yachts, that cleaned the yachts, that serviced the yachts. That's the way it works. [Fox News, Your World, 6/24/11, accessed via Nexis]

Hoft: "GOP Lawmakers Pull Out Of Budget Talks After Dems Insist On Job-Killing Tax Hikes." In a June 23 post to his blog, Gateway Pundit, titled, "GOP Lawmakers Pull Out Of Budget Talks After Dems Insist On Job-Killing Tax Hikes," Jim Hoft wrote: "Republican leaders pulled out of the bi-partisan budget talks after democrats [sic] continued to insist on job-killing tax hikes." [Gateway Pundit, 6/23/11]

Hoft: "Shocker. Obama's Treasury Secretary Calls For Tax Hikes." In a June 22 Gateway Pundit post titled, "Shocker. Obama's Treasury Secretary Calls For Tax Hikes," Hoft wrote:

You knew this was coming.

After blowing a trillion dollars on a failed stimulus plan the Obama Administration believes the best way to cut the record deficit is to raise taxes.


Now the Obama Administration wants to increase taxes to pay for their failed spending programs.

Figures. [Gateway Pundit, 6/22/11]

"Unrealistic": Conservative Economists Disagree, Call For Raising Revenue

The Hill: Bush Economic Advisor Mankiw "Knows Both Tax Increases And Spending Cuts Are Required." In a June 28 The Hill op-ed, Mark Mellman, president of The Mellman Group, cited a number of conservative economists and economic advisors who say that some form of revenue increases should be part of a solution to lowering the deficit. From The Hill:

America has both a spending problem and a revenue problem -- too much of the former and too little of the latter. Every serious student of the federal budget, right, left and center, agrees that any realistic solution requires a combination of spending cuts and revenue increases.

Democrats and Republicans on the Simpson-Bowles Commission knew that both revenue increases and spending cuts were necessary to deal effectively with our deficit problem.

N. Gregory Mankiw, the chairman of George Bush's Council of Economic Advisers, knows both tax increases and spending cuts are required. Indeed, Mankiw argues, "The distinction between spending and taxation is often murky and sometimes meaningless." Explaining that giving snipe hunters a tax break for every fake animal they hunt down is no different from setting up a program to pay snipe hunters for each pelt they bring in, Mankiw implicitly criticizes Republicans' unwillingness to end oil-company subsidies and explicitly advocates broadening the tax base and reducing rates to increase revenue. [The Hill, 6/28/11]

Reagan Budget Director Stockman: "It Is Simply Unrealistic To Say That Raising Revenue Isn't Part Of The Solution." From Mellman's June 28 The Hill op-ed:

President Reagan's budget director, David Stockman, knows raising revenue must be an essential component of any fiscal cure. "It is simply unrealistic to say that raising revenue isn't part of the solution. It's a measure of how far off the deep end Republicans have gone with this religious catechism about taxes," says Stockman, one of the biggest budget cutters of all time. [The Hill, 6/28/11]

Stein: "We've Got To Raise Taxes. There Is Just No Way Around It." On the June 25 edition of Fox Business' Cavuto on Business, guest Ben Stein said: "We've got to raise taxes. There is just no way around it. The deficit situation is so serious that while I wish we did not have to raise taxes, we just can't cut spending enough." From Cavuto on Business:

STEIN: Well, as I've been saying now ever since we met, we've got to raise taxes. There is just no way around it. The deficit situation is so serious that while I wish we did not have to raise taxes, we just can't cut spending enough. I wish we could. We can't. We have to raise taxes. Mr. Obama is going to have to do it. I don't know if the Republicans in the house will go along with it. If they don't there will be a genuine crisis, and I'm frankly frightened about it.


I think Republicans have painted themselves, ourselves into a corner here. I don't think it is the sensible, responsible corner to be in. Yes, as [Fox Business correspondent] Charlie [Gasparino] said, cut whatever can be reasonably cut, but don't rule out tax increases. Look, we have had fantastic growth in this country with much higher tax rates than we have now. We can have it again. Please, please, please, let's not get even close to a default. [Fox Business, Cavuto on Business, 6/25/11, via Media Matters]

Former GOP Staffer Bartlett: "There Is No Doubt That Closing Loopholes And Eliminating Many Tax Subsidies Would Have The Same Effect As Cutting Spending." In a June 24 column for The Fiscal Times, Bruce Bartlett, a former staffer for Rep. Ron Paul (R-TX) and a deputy assistant secretary at the Treasury under George H.W. Bush, wrote:

The main sticking point in negotiations between Republicans and Democrats on deficit reduction measures to accompany a rise in the debt limit is whether higher revenues should make any contribution. A key Republican concern is that any tax increase would depress the economy.


Of course, it goes without saying that there will be different economic effects depending on how spending is cut or taxes are raised. But the first-order effect in either case will be to reduce national income and depress growth. In the longer run, some spending cuts could well be expansionary if they altered economic behavior in a positive direction. In general, subsidies are a bad idea because they distort economic decision making and reduce growth below what would occur in a free market environment.

But the same is true for tax subsidies. If someone pays lower taxes because they produce ethanol it is really no different than just getting a government check for doing the same thing. Yet many Republicans oppose abolishing tax-based subsidies because it would be an impermissible and economically depressing "tax increase," while eliminating budget-based subsidies would be a beneficial "spending cut" that would be economically stimulating.

Economists have known for many years that many tax cuts are nothing more than spending by another name. They call such things "tax expenditures" and there are about $1 trillion worth in the tax code. Getting rid of many of them would have exactly the same economic benefits as reducing on-budget subsidies. Nevertheless, Republicans oppose eliminating tax expenditures unless other taxes are cut because any net tax increase would depress growth. The historical evidence, however, does not necessarily support this view.


[I]t is Republican dogma that tax increases are so offensive that they are willing to walk away from trillions of dollars of spending cuts that the Obama administration has agreed to and risk defaulting on the national debt just to prevent so much as $1 of tax increase from being enacted. While obviously any tax increase needs to be carefully considered, there is no doubt that closing loopholes and eliminating many tax subsidies would have the same effect as cutting spending. If Republicans believe that cutting spending is stimulative, they can't logically oppose cuts in spending through the tax code. [The Fiscal Times, 6/24/11, emphasis added]

Posted In
Economy, Budget, Taxes
National Review Online, Gateway Pundit
Mike Huckabee, Erick Erickson, Jim Hoft
Your World w/ Neil Cavuto, Red State
We've changed our commenting system to Disqus.
Instructions for signing up and claiming your comment history are located here.
Updated rules for commenting are here.