The negotiations over the approaching “fiscal cliff” are following a familiar format (“House GOP: We ‘have the votes’ for Plan B to avert ‘fiscal cliff,’ ” Web, Thursday). Republicans are being asked to agree to tax rate increases now in return for the Democrats’ delivery of some higher multiple of spending cuts later.
Maybe it’s time for a new approach. Let the Republicans agree to tax increases later in return for spending cuts now. For example, if the Democrats in power actually enact a budget that reduces federal outlays to, say, Rep. Paul Ryan’s spending path for the ensuing three years, the top marginal income-tax rate would thereafter go up to the Clinton-era 39.6 percent, and dividends would again become taxable as ordinary income. If spending moved above the agreed path, the tax provisions would remain at present levels. If Democrats actually kept the deal, they would have to decide in three years whether they could get more revenue from restoring the Clinton-era rates, or from leaving rates where they were and reveling in the economic growth.
There are other strategies that I prefer, but today’s Democrats won’t countenance them. In the spirit of compromise, let’s give this one a try. At least it wouldn’t end up like the phony “tax now, cut spending later” deals with Democrats that made fools out of Richard Nixon, Ronald Reagan and George H.W. Bush.