This is the Cato Daily Podcast for Thursday, August 11th, 2011.

I'm Caleb Brown.

The method the public apparently prefers to balance the federal budget is the so-called balanced approach. Some tax hikes, some

spending cuts, but is that the best way to go about it? Mike Tanner, Senior Fellow at

the Cato Institute, prefers a decidedly unbalanced approach to balancing the federal budget.

Tax increases are always popular as long as they take place at an income higher than the person being polled. But the reality is that you can't

simply tax the rich and solve our budget problems. In fact if you were to simply

confiscate all the wealth of every millionaire and billionaire,

as the president likes to say, in America, just take it all, you would get about 10% of what

this country owes. In fact, according to CBO, you'd actually have to raise tax

rates to the top tax rate of about 88% on individuals and businesses, and lower tax rates would have to go up commensurately.

Everybody would have to face enormous tax increases in order to get there, which of course you simply

can't do and preserve the kind of economic growth

that you need to balance the budget in the long run.

That is maintain the fabulous wealth creation machine that is the U economy? Well, that's right.

If you just look to Europe, you can see that in the face of their huge deficits,

they've followed the usual IMF liberal advice

and they've had a balanced approach they've had some minor

budget cuts they've tried to raise the retirement age and things like that but they've

also had very large tax increases they've increased their vats they've increased their income tax They've increased their vats. They've increased their income

tax. They've increased a number of other excise taxes they have. And the result has

been very anemic growth. They simply haven't had the growth to deal with the joblessness problem or to get the kind of building of the economy you need ultimately to create prosperity.

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