Congress's addiction to budgetary undiscipline

In the Fiscal Debate, a Little Symbolism Can Go a Long Way

By TYLER COWEN, NYT

“GRANT me chastity and continence, but not yet.” That line from St. Augustine could describe the undercurrent of the fiscal negotiations in Washington. We must decide whether to pursue a relatively loose and stimulative policy, and to trust in our later discipline, or to slam on the brakes now.

Yet there may be a way to square this circle. When it comes to income tax rates, we could raise them for virtually everyone, to send a clear message that the current fiscal situation is unsustainable. At the same time, we could limit those tax increases for most income classes to a relatively small percentage, much less than the full expiration of the Bush tax cuts would imply.

The sorry truth is that we Americans seem like the addict who keeps saying “I can quit any time,” yet doesn’t cut back. So what else might we say to frame this problem in a more useful way?

To see how this could work, consider this script: Let’s say the Republicans decide to largely give in to what the President Obama is proposing. There is, however, a catch: the president has to agree to raise marginal tax rates on all income classes, not just on the rich. The tax increase would be one-quarter of a percentage point, or some other arbitrary small amount, with larger increases possible for higher incomes, as has been discussed. The deal also stipulates that both the president and Congress must publicly acknowledge that current plans for government spending can’t be financed unless taxes on most or all income groups climb further yet, and by some hefty amount.

(More here.)