One of the arguments some intelligent conservatives are making is that if Republicans agree to increase rates on the top earners in America, it will do irreparable damage to the GOP. The basic case goes like this:
If Obama succeeds and ends up getting a confession from Republicans that tax cuts are the problem, tax cuts are the cause, what happens to the next Republican who campaigns on tax cuts? Not going to have a prayer.
Now it may well be that raising tax rates will do significant damage to the Republican Party. It may be substantively unwise. And I’m certainly sympathetic to Republicans not wanting to play a role in something they think is bad policy.
But here’s where I think this analysis is wrong.
If Republicans agreed to raise the rates on the top income earners in America, it would not be a “confession” that tax cuts are the problem. It would be a concession–one done in order to (a) keep something worse from happening (e.g., higher taxes on everyone, not just the top 2 percent of income earners; and/or the economic damage caused by going over the fiscal cliff) or (b) extracting something better in return (for example, entitlement reforms).
Whether the concession is worthwhile depends on the details of a deal. But conservatives should bear in mind that even a politician as principled as Ronald Reagan agreed to tax increases as part of broader deals. Indeed, Reagan agreed to what at the time was the largest tax increase in American history (the TEFRA tax).
It’s true that Reagan came to regret that decision. But the reason is that he never got the spending cuts he asked for in exchange for the tax increase he reluctantly agreed to. If he had, Reagan would have defended his decision on the grounds that the tax increases, which as a general matter he strongly opposed, were worth what he was able to get in return (spending cuts). And even though Reagan had agreed to tax increases in 1982, he and his party were still able to champion tax cuts in 1984.
My guess is at the end of the day, Speaker Boehner will (wisely) not agree to raise the top rates, given how obstinate and unreasonable President Obama has shown himself to be. But even if Boehner does agree to an increase in the top rates, it will be a concession, not a confession.
Ronald Reagan agreed to tax increases and in the process didn’t ruin the GOP brand, and neither would John Boehner.