Washington Examiner editorial writer explains why spending cuts — not tax hikes — are needed to balance the federal budget

Philip Klein of the Washington Examiner challenges the capital city media narrative that Republicans should be willing to accept tax increases in return for Democrats’ willingness to accept spending cuts in the federal debt-limit debate.

[T]his premise is deeply flawed. Democrats don’t deserve praise for being gracious enough to cut spending at a time when the nation’s debt has already eclipsed $10 trillion and spending on the major entitlement programs is growing at an unsustainable pace.

To paraphrase the Chris Rock routine in which he mocks those who boast about taking care of their kids, that’s what they’re supposed to do.

From a purely technical standpoint, it’s possible to put the nation on a sustainable fiscal course without raising taxes. But it isn’t possible to increase taxes high enough to balance the long-term budget without cutting spending.

Back in May 2008, none other than Peter Orszag — then the future budget director for President Obama and head of the Congressional Budget Office — wrote a letter to Rep. Paul Ryan, R-Wis., addressing this very issue.

In the letter, the CBO estimated that achieving long-term balance exclusively through tax increases would eventually require the top individual and corporate tax rates to reach a staggering 88 percent.

“Such tax rates would significantly reduce economic activity and would create serious problems with tax avoidance and tax evasion,” read the Orszag letter. “Revenues would probably fall significantly short of the amount needed to finance the growth of spending; therefore, tax rates at such levels would not be feasible.”

The debt outlook deteriorated substantially months after the letter was written, in the wake of the meltdown of financial markets.

We’ve heard a lot from Democrats about how we should return to Clinton-era levels of taxation, under which the economy was booming and the federal government was running surpluses.

In 2000, the last full year of President Clinton’s administration, tax revenues were 20.6 percent of GDP, according to the CBO. That nearly equaled the all-time record of 20.9 percent achieved during World War II.

Yet last month, the CBO projected that total spending as a share of GDP would reach 33.9 percent by 2035. Therefore, even if we were to equal record tax revenue, we’d still be running a deficit of 13 percent of GDP by the time this year’s college graduates reach middle age. That’s the equivalent of $2 trillion in today’s dollars.