We can also raise income tax rates slightly on the top bracket, and increase estate tax rates significantly on the wealthiest estates. I'm not talking about an across-the-board income tax hike.
We can encourage business-friendly policies like infrastructure investments, breaking the link between business and health insurance, easing labor regulations, and promoting access to capital through low interest rates.
History would disagree with this conclusion. Tax hikes are one economic lever to pull; there are many others. There is no reason to think that tax hikes would necessarily cause unemployment, especially if we're encouraging business-friendly policies in other ways. If we can recover that half-trillion dollars per year that we're missing out on because we're below the 19% revenue-to-GDP historical average, that will support long-term employment. High amounts of debt are bad for long-term economic growth.
I agree, which is one reason I'm more worried about the long-term deficit than the current deficit. In the long term, the main fiscal problems we need to tackle are defense, social security, Medicare/Medicaid, and an unwieldy tax code. If we can solve those problems, I'm OK with a temporary deficit until the economy recovers.