As Washington debates the fate of the 2001 and 2003 tax cuts, many lawmakers have fallen into a logical trap of their own making. Although they recognize that tax increases hurt the economy, they argue that our huge deficit requires Congress to raise revenue through a tax hike.
This argument rests on the flawed premise that we can reduce the deficit only by increasing taxes, as if high levels of spending are a given. Not so.
To reduce spending and reignite growth, this Congress or its successor should take two actions. First, immediately cut the level of spending that has been increased so dramatically since 2008. Second, institute an "inflation-minus-one" rule to constrain future spending increases.