So Plan B (Speaker Boehner’s latest plan to avoid the “fiscal cliff”) has won over Paul Ryan and Grover Norquist. I’m happy for them.
I’m not so pleased for America.
Far too much of this discussion has been about the politics (If I hear “leverage” one more time…); almost none of the discussion has been around the economics of this.
Tax increases on the wealthy will mean the wealthy will move income rather than invest it. A tax increase on capital gains will do that and more – and likely reduce revenue to the government besides.
On the whole, tax increases are far more damaging to the economy than spending cuts (details here); they also end up with revenue far short of projections, which usually means the deficit reduction plan gets scrapped (with all the spending cuts involved still to be enacted) in favor of a new plan, with more tax increases, and spending cuts pushed even further into the future.
Is it so hard for Boehner et al to argue that?
Cross-posted to Virginia Virtucon