Here is my op-ed on deficit reduction from this morning’s Wall Street Journal (subscription required). For those without subscriptions, the thrust (which won’t be new to long-time readers of this blog) is that raising taxes can’t convert fiscally irresponsible spending to fiscally responsible spending.
If your household is over budget, you can address that problem either by spending less or by earning more income. It is tempting to fall into the trap of thinking that by analogy, the government can address its budget problems either by spending less or by raising taxes. But the analogy fails because raising taxes is not like earning more income; it’s more like visiting the ATM.
The government is an agent of the taxpayers. Raising taxes to pay for government spending depletes our assets just as visiting the ATM to pay for household spending depletes our assets. That’s not at all like earning income, which adds to our assets.
So insofar as the supercommittee relies on tax increases to address issues of “fiscal irresponsibility”, it will have failed.