If you’re following the evolving terms of the budget debate, the hip new phrase is “new revenues.” It sounds so much cooler than “tax increases.”
Both parties are massaging their rhetoric in the debt ceiling fight, and the media are using the phrase “new revenues” to describe proposals to reduce the U.S. deficit. Samples:
- Washington Post blogger Greg Sargent tweeted, “Can someone please settle the question of whether GOP is also saying No to new revenues?”
- Reuters reported that Senator Max Baucus (D–MT) “said new revenues had to be part of a balanced deal to reduce spending and increase the country’s borrowing authority.”
- And, of course, New York Times columnist Thomas Friedman wrote that “we need to raise new revenues in order to reinvest in the sources of our strength: education, infrastructure and government-funded research to push out the boundaries of knowledge.”
The Post’s Ezra Klein expressed doubt that revenue could come from anything but tax increases as he reacted to a news story: “The most surprising quote in the story is from Majority Leader Eric Cantor, who told reporters ‘We are not opposed to revenues. We are just opposed to tax increases.’”
Actually, that’s not a surprising thing to say. Revenues and tax increases are not the same concepts at all.
The dreaded tax hike—and you know it’s dreaded when those who want to raise taxes are working so hard to find a less painful, less obvious way of advocating their position—is what happens when Congress changes the law to generate more tax revenue from the same people who are already paying. A tax hike just means Congress refused to prioritize, and they want taxpayers to pay for that failure.
New revenues, on the other hand, can—and should—result from economic growth, which is exactly what the U.S. is lacking. The stream of revenue flowing into Washington increases when businesses are successful, when the unemployed find jobs, and when workers get raises. If the President would lift his anti-growth policies, we would see a stronger economy and, yes, “new revenues.”
The best way to bring in “new revenues” is to reform the tax system and reduce government spending. This could balance the budget without raising taxes by one dime, as Heritage’s Saving the American Dream plan proposes.