"Do we want to keep these tax cuts for the wealthiest Americans?" Obama asked in his State of the Union address in January. "Or do we want to keep our investments in everything else – like education and medical research, a strong military and care for our veterans? Because if we’re serious about paying down our debt, we can’t do both."
The fight over taxes sets up a tug and pull for voter hearts. Many Americans are sympathetic to the argument that it's not realistic to solve chronic budget deficits without some tax hikes alongside spending cuts. For instance, polls have found majority support for tax hikes on the rich, such as by allowing the Bush tax cuts to expire for households earning more than $250,000.
At the same time, Romney may be able to lure swing voters to his side, with an argument based on job growth and reining in the size of government.
"This is all about creating good jobs," Romney said of his economic plan Sunday. He said that his plan is to bring federal spending down from 25 percent of gross domestic product to 20 percent, and that taming the size of government will translate into "getting people back to work with rising incomes again."
Bob Schieffer of CBS framed his question for Romney around the fact that contenders for the Republican nomination (Romney included) had backed a controversial pledge created by antitax advocate Grover Norquist. "Government is big and getting larger," Romney said in defense of his position. "There are those who think the answer is just to take a little more from the American people, just give us a little more. And there are places that have gone that way: California, for instance, keeps raising taxes more and more and more. And funny thing, the more they raise in taxes, the deficits get larger and larger."
Whichever side is right about tax policy, economists agree on one point: Regardless of tax rates, government revenues hang to a significant degree on the performance of the economy. If jobs and incomes start growing faster, that will be good for tax revenues.