The Budget and Political Reality

Abstract

Before the Great Recession of 2007-2009, all proposals for tax reform—whether big or small, fundamental or incremental, untried or traditional, liberal or conservative—shared one common feature. None of them raised revenue (and a few were overall tax cuts). Enacting tax reform is difficult enough. It is often called the “impossible dream.” No tax reform advocate wants to take on the additional political baggage of simultaneously raising taxes in a nation as anti-tax as the United States. But tax reformers no longer have that luxury. Tax reformers can no more ignore the effect of the burgeoning federal debt than the tides can ignore the gravitational pull of the moon. Even if you share the views of the current Republican leadership in Congress that tax reform should not raise revenue, there is no denying that that the national debt casts a long shadow over any tax debate.