President Obama has proposed returning the tax rates on top earners to what they were under the Clinton administration. (Although his proposal would actually lead to higher tax rates after two years, due to provisions of the health care overhaul.  But that could be remedied.)

I don’t think it’s a good idea to raise tax rates from where they are now. But I’m willing to offer a compromise, under which we conservatives agree allow the tax rates to go back up to where they were under Clinton.  (OK, I don’t speak for conservatives in general, but I think conservatives and Republicans should think about the possibility of agreeing to this compromise.)  After all, there was an economic boom in the Clinton years, so it’s clear that those tax rates — although not optimal — were not so oppressive as to stifle economic growth. (There’s a good argument to be made that the economic boom [and subsequent bubble burst] were due to the explosive growth of the Internet, not Clinton’s policies.  But the fact remains that the economy grew fairly well under Clintonian tax rates.)

In return for allowing tax rates to rise to what they were under Clinton, liberals and Democrats would need to agree to restrict annual federal spending to the highest annual spending under Clinton (measured per capita, to account for population growth, and measured in constant dollars, to account for inflation.  So spending would, in nominal terms, be higher than it was under Clinton.)  Now, unless liberals and Democrats are going to argue that the Clinton years were a disaster due to the lack of government spending, then this level of spending should be acceptable to them.

We could call it the “Back to the Clinton Years” compromise:  Clintonian tax rates in return for Clintonian spending rates.


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