Flush with the adrenaline rush of his election victory, President Obama insists that Congress must now agree not only to raise taxes on the “rich,” but also to adopt his previously ignored full budget. The president demands a $1.6 trillion tax increase over the next decade. He maintains that higher revenues must come from marginal-rate increases but offers no policy rationale. He wants to treat $900 billion in spending cuts he agreed to in 2011 (as part of the Budget Control Act) as if they now count on his ledger as new cuts. He says that he will consider Medicare cuts and tax reform in the future, maybe.
On the other hand, Mr. Obama says reductions in ObamaCare spending are out of the question, and Congress must now agree to at least $50 billion in new stimulus spending next year. The debt limit must be permanently increased without accompanying spending cuts.
By contrast, House Speaker John Boehner and Senate Minority Leader Mitch McConnell have offered on behalf of Republicans a significant concession in an attempt to close the negotiating gap. Mr. Boehner and Mr. McConnell propose to accept higher taxes on the rich as long as government spending is cut significantly and incentives to work and invest are not weakened. That way, higher taxes and entitlement-spending cuts would reduce future deficits, not finance even bigger government as the president proposes.