In 1990, President George H.W. Bush broke his “read my lips” promise. He approved a budget package that included a higher top income tax rate. The move infuriated many of his fellow Republicans, who recast their opposition to tax increases of any kind, launching the pledge of Grover Norquist. Their position held — until Tuesday, when Republicans, 85 in the House and 40 in the Senate, joined with Democrats in taking the realistic and responsible step of increasing taxes on those households at the highest income levels.
That represents a victory for those advocating a balanced approach to putting the country’s fiscal house in order. At last, the barrier against raising taxes has been crossed. It is a practical step. Any reasonable plan for deficit-reduction must involve additional revenues and savings generated through spending cuts.
Congress and the Obama White House already had delivered a package of spending cuts last year. Now they have provided new revenue. Such balance should be sustained going forward.
No question, the process has been ugly. Congress created the problem of the “fiscal cliff.” It had more than a year to address the challenge. What should have been accomplished in a considered, steady way came together in a messy rush as the deadline arrived and went. Hard to believe anyone is happy with all of the details, or the prospect of further brinkmanship when the debt limit must be increased in a matter of months.
Democrats grumbled about President Obama conceding too much, agreeing to a lower threshold for increased income taxes, starting at $450,000 a year instead of the $250,000 of his campaign. Worth stressing is that the president gained key items in the bargaining, including extensions of unemployment benefits, the tax credit for college costs and incentives for renewable energy and research and development.
Republicans fretted about a lack of spending reductions. Those choices have been postponed, and rightly so. They must be pursued thoughtfully. If higher taxes at the top income levels promise a negligible impact on the fragile economy, deep spending cuts will likely bring harm. Best to focus on the spending that invites a big problem — in other words, on Medicare and Medicaid, linked to mounting health-care spending as a whole.
The Affordable Care Act takes aim at the problem. More steps are necessary, requiring time and explanation. The recent debate over health care reaffirms that many Americans like things as they are, even as the moment calls for real change.
The idea that this polarized Congress could conduct such an elevated discussion seems far-fetched, to say the least. It has struggled to get priorities straight, including the House fumbling aid to the victims of Hurricane Sandy. Take the failure to extend the payroll tax holiday, which has put money in the checkbooks of typical Americans, bolstering an iffy recovery. Now paychecks will shrink. In a compromise that reflected keenly the art of the possible, this crucial possibility was missed.
