Taxes Vs. Deficits

It now appears that Mr. Obama will not move to raise taxes on the highest bracket under his initial legislation. I have mixed feelings on this. On the one hand, I have strenuously opposed higher taxes for the top bracket. I do not believe in punishing success. If taxes are lowered on the lower brackets, the tax burden will still shift in ways that could become very important down the road, however, it will be the lesser of two evils. On the other hand, without some form of tax increase, the deficit will be out of control. There have already been estimates of $1 trillion dollar deficits under Mr. Obama. As the depth of the recession becomes clear, that may be optimistic, even with tax hikes. Without the additional revenue, all bets are off. Though there are all sorts of technical points and subtopics, generally speaking deficits are bad. Ironically, those who embraced deficits in the past have been the somewhat irrational far right, such as the neo-cons. Some who were essentially anarcho-capitalists and/or corporatist actually viewed deficit spending as a way of permanently crippling government.

More interestingly, this points to the possibility the Mr. Obama may in fact govern from the center, though in some cases that may be a worst of both worlds proposition, rather than a true centrist policy. This would have many implications for 2010, 2012 and beyond.