RAISE TAXES AND LOWER RATES AND EVERYONE CAN DECLARE VICTORY:

A Debt-Limit Breakout: Republicans should call Obama's bluff on tax increases. (WSJ, 7/05/11)

The debt-limit talks in Washington are bogged down in the hedgerows, with some Republicans insisting on a balanced budget amendment that can't pass Congress and President Obama insisting on tax increases that Republicans oppose. What this debate needs is a breakout strategy—to wit, Republicans should answer Mr. Obama's tax call by accepting his business tax increases in return for a lower corporate tax rate.

We've long favored such a reform, and last year so did the Simpson-Bowles deficit commission and the White House economic advisory council headed by Paul Volcker. But the cause has now acquired no less a convert than Bill Clinton. Speaking Saturday at something called the Aspen Ideas Festival, the former President admitted that he had once raised tax rates on corporations.

"It made sense when I did it. It doesn't make sense anymore. We've got an uncompetitive rate," he said. "We tax at 35% of income, although we only take about 23%. So we should cut the rate to 25%, or whatever's competitive, and eliminate a lot of the deductions so that we still get a fair amount, and there's not so much variance in what the corporations pay."

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