For the last few days, Republican leaders have been dodgey when it comes to whether they will support tax hikes as part of deal that comes out of the Super Committee. It’s not hard to see the writing of yet another betrayal on the wall.
The deal that was on the table from Republicans on the Super Committee would have increased revenues by over $400 billion by closing loopholes. Part of the reason Republicans are proposing tax hikes is because they are so insistant that defense spending cuts, roughly $600 billion over 10 years, that would come if no deal is reached. Keep in mind that defense spending is at its highest level since World War II.
Over at the American Enterprise Institute, economist James Pethokoukis gives us five reasons why raising taxes, which many Republicans seem intent on doing, is an incredibly dumb idea:
1. The economy stinks. From Wall Street to Washington, the baseline economic case for 2012 is miserable 1-2 percent growth and around 9 percent unemployment. (Indeed, Federal Reserve research finds that when year-over-year real GDP growth falls below 2 percent, recessions follow within a year 70 percent of the time.) Beyond that … not much better. The IMF, for instance, sees sub-3 percent growth through 2016, resulting in continued high unemployment. And this all assumes the eurozone financial crisis doesn’t get much worse, which it likely will. Hardly the time for raising taxes and turning America permanently into slow-growth, no-growth Europe.