In the midst of the media's recent myopic focus on the election of Sen. Scott Brown (R-MA), the fourth estate has largely overlooked the fact that Oregon voters approved measures at the ballot box in January to increase taxes on wealthy citizens and corporations to help bring the state back into fiscal balance. Earlier this week, the Center on Budget and Policy Priorities (CBPP) released a short paper on the implications those votes could have in Congress on the debate over the expiration of the Bush Tax Cuts.

The two initiatives, Measures 66 and 67, raised taxes by two percentage points on households making more than $250,000 a year and several points on large corporations, respectively. Oregonians passed the two measures by substantial margins; each initiative passed with 54 percent approval. This despite opponents' efforts in the state to paint the ballot measures as job-killing tax hikes.

Chuck Marr and Michael Leachman, who authored the report, argue, "The results from Oregon suggest that voters are open to tax increases on high-income households and corporations when the situation demands it." They further state that the results call "into question the conventional wisdom that tax-increase proposals are politically untenable regardless of their merit on economic, budgetary, and equity grounds."

My thought here is that Marr and Leachman are on to something, and that the votes in Oregon represent, as Bruce Bartlett notes, a temporary swing of the pendulum of populist anger – presently represented by the Tea Party movement – back the other way. Whether Congress will get the same support for letting the Bush Tax Cuts on the wealthiest Americans lapse is debatable, but those on Capitol Hill should take note of the Oregon results.

When the issue of the Bush Tax Cuts comes up later this year, some on Capitol Hill will argue that Congress should extend them all. Entwined with this debate will be the issue of deficits, and, without losing a step, the same members of Congress will assert that rather than balancing the budget through some combination of tax increases and spending cuts, the government should rely on the latter.

But, in spite of what deficit hawks on Capitol Hill claim, the government cannot simply balance the budget through spending cuts. It just won't work. There have to be tax increases. As Marr and Leachman observe:

A cuts-only approach would not only add to the hardships that families are experiencing because of the recession, but would also undermine states’ school systems, universities, health-care systems, and infrastructure, which are important for state economies.

Moreover, despite what some supply-siders maintain, tax increases on the wealthiest of Americans will not cripple job creation. Unless the demand is there, no business owner is going to increase his or her workforce. Indeed, those at the top of the income scale are much more likely to save extra money, not spend it. The latter is what the economy needs during a recession; witness the Recovery Act.

While short-term budget deficits don't pose the kind of threat to the nation's economy that some claim, long-term deficits do pose a risk. To tackle these long-term deficits, some combination of tax increases and spending cuts will be necessary. One of the no-brainer revenue raisers for Congress should be the expiration of the Bush Tax Cuts for those making over $250,000 a year.

Image by Flickr user Sacred Destinations used under a Creative Commons license.