Reading Peter Orzag’s Tea Leaves

So word on the street is that Peter Orzag, the influential director of the Office of Management and Budget, won’t reaffirm the president’s campaign promise to not raise taxes on 95% of Americans.  That promise was always political, and Orzag’s prevarication is a good sign for the country (but not necessarily the Democrats).  Contrary to the Daily Beast article, this groundwork hasn’t just started it: in February, Obama himself told Business Week that all options are on the table for the Deficit Commission.

Because the vast majority of Americans, and pretty much all of the middle class, has not seen a real wage increase in 30 years, I don’t think it’s prudent to raise their direct (income or payroll) taxes.  Instead, a consumption tax should be the main plank of tax reform since it will raise a ton of revenue, impact everyone, and leave Obama wiggle room on the campaign trail.