Americans have made it clear that they want a certain kind of government, one that can field a strong military and also maintain popular programs like Medicare. Yet we are not paying nearly enough taxes to maintain those programs. Even major changes to the health care system — the single most important step for closing the budget gap — will not close it entirely. Taxes must rise, too.
This is a point on which serious Democrats and serious Republicans agree, even if they do so with euphemism. “We are on an unsustainable path,” says Peter Orszag, Mr. Obama’s budget director. Judd Gregg, the ranking Republican on the Senate Budget Committee, has said, “Revenues are going to have to go up.” Douglas Holtz-Eakin and Dan Crippen, budget experts who advised the McCain campaign, have quietly acknowledged the same.
Fortunately, the coming tax increase does not have to be economically ruinous. Despite all the scary stories you’ve heard, the evidence that higher taxes necessarily cripple an economy is somewhere between thin and nonexistent.
When over the past 60 years did the American economy grow fastest? The 1950s and 1960s, when the top marginal tax rate was a now-unthinkable 90 percent. And when over the past generation did the economy grow fastest? The late 1990s, when President Bill Clinton briefly took federal taxes to 20 percent of the G.D.P.
The real uncertainty is how, in the current political climate, Mr. Obama will manage to persuade people that taxes must go up. In his speech on Tuesday night, he didn’t even try. But he doesn’t have forever to do so.
It's probably safe to say that Grover Norquist flipping out somewhere. But to paraphrase Holmes, I like our civilization, I'd like more of it, and I'm willing to pay for it.
UPDATE: By the way, by all nearly accounts, Obama hit it out of the park lats night (h/t Adam.)