Bruce Bartlett, senior economic advisor to Ronald Reagan and George H.W. Bush and current apostate of the Republican party, writes an excellent tax and economic blog for The New York Times. His most recent piece argues that our fiscal situation is not as bad as we think, providing our revenues increase back to historical levels:
Revenues are just 15.8 percent of gross domestic product, compared with a postwar average of 18.5 percent, which even Mr. [Grover] Norquist accepts as a long-term goal. The sooner we get there, the sooner we can get the national finances on track toward sustainability.
He also stresses that no matter what happens, including tax increases, they be made permanent in order to give business confidence:
A key reason that the tax-rate reductions of the Bush administration failed to have any stimulative effect is because they came with expiration dates from Day 1. Republicans insisted on cutting them on a partisan basis, without negotiating with Democrats. Consequently, they lacked the votes in the Senate to overcome the so-called Byrd Rule, which limits legislation that raises the deficit to a maximum of 10 years when budget reconciliation procedures are used.
Republicans needed to use those procedures to enact their tax cuts, in order to overcome a Senate filibuster by Democrats. Permanent tax changes would have required bipartisanship, which the Republicans rejected.
In 2010, Republicans congratulated themselves that their strategy was working when they refused to negotiate with President Obama because he demanded that tax cuts for the rich be allowed to expire. Faced with an earlier “fiscal cliff” on Jan. 1, 2011, he caved to Republican intransigence and agreed to a two-year extension of all the Bush tax cuts. That extension expires at the end of this year, and President Obama has renewed his demand that taxes on the rich be allowed to rise.