In characteristic fashion, President Obama held a post-election "press conference" on Friday that didn't involve him answering any questions. He just made pronouncements. And while there was a bit of conciliatory language sprinkled in, he was adamant that his narrow re-election victory means everyone must now submit to his theories about a "balanced approach" to deficit reduction. (Does anyone remember the same being said about George Bush's agenda following his nearly identical re-election victory in 2004? No, that's not quite how it went down, was it?)
Of course, when Obama talks about a "balanced approach" that includes a mix of tax hikes and spending reductions, he really means tax hikes now, followed spending reductions at some vague point in the distant future, when another Congress can conveniently decide not to follow through on them. We all know how that works. It's happened every single time anyone tried to work out a "balanced approach" with Democrats. Along with the power of the Laffer Curve, which proves that lower tax rates maximize actual government revenue, it's the lesson of the Reagan years that liberals desperately want you to forget. Call it the "Wimpy Rule," named for the portly cheapskate from the Popeye cartoons: Uncle Sam will gladly pay you with spending cuts on Tuesday for a tax burger today. But Tuesday never comes.
I'm dubious that House Speaker John Boehner will be able to withstand the intense pressure for tax increases that will be coming his way. It's right out of the Saul Alinsky playbook: "You Republicans say you care about the deficit, so how can you hold up deficit relief to protect millionaires from a little tax cut?" Of course, in the very same appearance, President Obama re-affirmed that when he says "millionaires," he means people (including a huge number of small businesses) who make over $250,000 per year.
I'm second to none in my avocation as a doomsday prophet who thinks the national debt will soon destroy us, but our highest priority right now should be economic growth. We need jobs, investment, and big-ticket business spending. It's funny how the Democrats always convince the public to view the deficit as a vague, abstract nuisance when they want to spend money, but it becomes a doomsday asteroid poised to land on a bus full of orphaned children when the discussion turns to tax increases. In this case, Job One really should be jobs - created not with debt-busting pork barrel "stimulus" spending, but tax cuts and other pro-growth policies. That would create additional tax revenue that would alleviate pressure from the deficit, while we hammered out deals to restore balance to our federal budget (and, you know, actually write a federal budget, for the first time in the Obama era.) The very last thing we should do is drop tax bombs on job creators.
So if Boehner and his team are going to put some tax increases on the table, perhaps by eliminating deductions more than raising rates, they should learn from past mistakes a drive a truly hard bargain. Make the spending cuts immediate, not a load of cold porridge about $X of cuts happening over ten years, eight of which will never come. The opening bid should be small revenue increases for big fiscal restraint, something on the scale of giving Obama his silly "Buffett Rule" millionaire surtax in exchange for a balanced budget.
And let's hope the Speaker and the rest of the Republican negotiators are smart enough to propose revenue increases that will hurt liberals the most. Start by taxing the ever-loving crap out of Hollywood. I've suggested this before, and the esteemed Instapundit, Glenn Reynolds, was on the same wavelength last August when he suggested bringing back the 20 percent excise tax on motion picture gross revenue from the 1950s.
"The movie excise tax was imposed in response to the high deficits after World War Two," Reynolds recalled. "Deficits are high again, and there's already historical precedent. Of course, to keep up with technology, the tax should now apply to DVDs, downloadable movies, pay-per-view and the like. But in these financially perilous times, why should movie stars and studio moguls, with their yachts, swimming pools and private jets, not at least shoulder the burden they carried back in Harry Truman's day - when, to be honest, movies were better anyway."
As Reynolds noted, one side effect of such proposals is that it causes far-Left Hollywood types to suddenly begin babbling about the depressing effects of high tax rates upon economic growth, as though they had been suddenly possessed by the ghost of Milton Friedman. That's fun even if the tax proposals end up getting defeated. Especially now that we have YouTube to disseminate and immortalize their panicked bursts of "trickle-down economic" wisdom.
Reynolds had other suggestions for revenue proposals - many of them involving the elimination of deductions, which seems to be the spirit in Washington at the moment - that would hurt blue state political machines and liberal institutions the most. Capping the mortgage interest deduction at $250,000, for example, would hurt those rich blue enclaves with high property values - 8 of the 10 richest counties in America voted for Barack Obama in 2012. Taxing trust funds and hoards of foundation money would hurt the Left, as outside of Hollywood, rich liberals are more likely to be sitting on piles of inherited assets, while conservative millionaires tend to be actively generating and re-investing income. Ending the federal tax deductions for state and local taxes - an idea prominently advocated by Newt Gingrich during the Republican primary - would end the practice of federal taxpayers subsidizing the government greed of those big-spending blue states. It's actually a form of inter-state redistribution as it stands, so let's do away with it.
The point is that anyone can tear pages out of Barack Obama's beloved Alinsky playbook. He can be forced to live up to his own standards. His ideology can be bent into shapes that will enrage his loyal constituents. The President says he wants a "balanced approach?" Let's jump on the see-saw with gusto, and give him one hell of a ride.
