How Republicans Can Win On Taxes And Help The Economy

Moneybox
A blog about business and economics.
Nov. 29 2012 7:15 PM

How Republicans Can Win On Taxes And Help The Economy

Republicans have decided to reject (of course) and leak the details of (a bit surprising) the White House's opening bid in fiscal cliff negotiations. You can read all the bullet points here, but the basic summary is $1.6 trillion in higher taxes relative to current policy (i.e., more than you get just from expiration of Bush tax cuts for the rich), $400 billion in entitlement cuts from the president's FY 2013 budget, and a bunch of stimulus ideas—basically the American Jobs Act plus a payroll tax holiday extension.

I'm glad to see the White House put so much emphasis on stimulus, and it gives Republicans a great opportunity to do en enormous favor to the country and achieve many of their tax policy goals. How? By saying yes.

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Say yes to all the stimulus, that is. And say yes to the entitlement cuts. Throw in some extra entitlement cuts, though, if there's anything the GOP feels strongly about. But say no on taxes. Tell Obama no on the higher rates for the rich, no on the estate tax, no on all the tax stuff. Instead he can have the almost $800 billion in revenue that comes overwhelmingly but not excusively from the rich by capping deductions at $50,000. If Obama has a religious preference for a somewhat lower cap and somewhat more revenue, then maybe he gets it.

But the point is that the GOP can drop their obsession with making Obama a failed one-term president and work with him on reviving the economy. Tell him he can have his stimulus and he can even have higher tax revenue if he really wants it, but that the price is giving up his obsession with higher rates. Is he more interested in soaking the rich or in creating jobs? I don't think Obama says no to a deal like that, and if he does lots of sensible liberals (like this guy) will call him out on it. Then we can put this sorry episode behind us, proclaim the Grand Bargaining Era done for, and hopefully move on to other things.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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