I very much appreciated this crisp little blog post from my CBPP colleague Chuck Marr riffing off of a Bob Rubin oped today.
Two key points: First, this one:
Just like today, critics warned that raising the top rate would wreck the economy and the promised deficit reduction would not occur. The opposite happened: economic growth averaged nearly 4 percent annually over the Clinton years, helping turn large deficits into large surpluses.
I added employment as a variable on my version of Chuck’s graph—jobs were up 20 million over those years, compared to about a quarter of that during the GW Bush years under the very supply-side tax cut regime that some are arguing for today.
Sources: CBPP, BLS
Point two, as Chuck puts it:
Seeking to avoid raising tax rates, many lawmakers are focused on scaling back tax deductions, credits, and other preferences, which are known collectively as “tax expenditures.” One problem, however, is that, for the most part, these tax expenditures are not what most Americans would consider “loopholes.” Instead, they are popular and widely used tax preferences, such as the tax-free treatment of employer-provided health care, the deduction for home mortgage interest, and the deduction for charitable giving. As a result, policymakers will find it politically difficult to scale back these and other popular provisions to any great extent.
So both the politics (including the election outcome, of course) and the economic results point towards sticking with the President’s plan to allow the upper-income Bush cuts to expire.