Taxes are going up. That is the reality now that President Obama has been reelected. The only question is how and by how much. If Republicans want to minimize the damage from Obama’s tax hikes, they need to first decide which is more important to them: keeping overall federal government revenues as low as possible, or keeping top marginal rates as low as possible.

We already know what the Democrats’ priorities are. They want higher rates on the rich. Preferably, they want the top rate on families making more than $250,000 per year to rise from the 35 percent it is today to the 39.6 percent rate we had under President Clinton. Although, in his last press conference Obama hinted that he may be willing to accept a smaller increase. Maybe 38 percent would be acceptable. According to the Congressional Budget Office, letting the top two rates rise to Clinto-era levels (top rate of 39.6 percent), while preserving the rest of the Bush tax cuts and fixing the Alternative Minimum Tax, would raise $824 billion over ten years.

Republican leaders, however, have expressed a preference for raising revenue by capping/eliminating deductions for the wealthy. They believe that keeping the top rate at 35 percent is the best way to minimize the damage from the Obama tax hikes. But is it?

Democrats are insistent that capping/eliminating deductions can not raise as much revenue as raising rates. But that is not true. According to the Congressional Budget Office, limiting itemized deductions to 15 percent of income would bring in $1.2 trillion over ten years. That is almost $400 billion more in revenue than from just letting the top Bush rates expire.

So Republicans have a choice: they can fight for lower rates, but accept higher overall tax hikes; or they can let Obama have his Clinton era rates on the wealthy and minimize the tax hike to just $824 billion.

This is not a choice any conservative lawmaker needs to make. But these are the hard questions conservatives will have to answer in Obama’s second term.

From The Washington Examiner
Examiner Editorial: Struggling with the complexities of health exchanges
Michael Barone: Both sides must give ground to avoid ‘fiscal cliff’
Phil Klein: A talk with D.C.’s health exchange board
Tim Carney: Uneasy alliance between old-line GOP and Tea Party
Joel Gehrke: WH denies editing ‘al Qaida’ out of Rice talking points

In Other News
The Wall Street Journal, Investment Falls Off a Cliff: Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.
The New York Times, Investors Rush to Beat Threat of Higher Taxes: Business owners and investors are rapidly maneuvering to shield themselves from the prospect of higher taxes next year, a strategy that is sending ripples across Wall Street and broad areas of the economy.
The Washington Post, Death toll rises as Israeli military assaults Gaza Strip: The death toll of Israel’s military campaign in the Gaza Strip rose to 91 Monday, the local health ministry said, as shelling and air strikes continued overnight and into the morning.
The New York Times, Brigades That Fire on Israel Are Showing a New Discipline: With an expanding arsenal and financing provided by Iran, Syria, Sudan and other foreign sources, the military wing of the Islamic Hamas movement, the Izzedine al-Qassam Brigades, has become highly organized and increasingly professionalized.
McClatchy Newspapers, Calif. judge denies farmers’ plea to halt bullet train: A California judge Friday denied a last-ditch request from Central Valley opponents to halt all work on the state’s high speed rail project.
McClatchy Newspapers, Obama lands in Myanmar, a first for a US president: President Barack Obama made an historic visit to Myanmar Monday, becoming the first U.S. president to visit the Southeast Asia nation.

Righty Playbook
The Weekly Standard‘s Stephen Hayes on Susan Rice’s Benghazi talking points.
The American Enterprise Institute’s Andrew Biggs and The Heritage Foundation’s Jason Richwine on the truth about federal salary numbers.
James Capretta and Yuval Levin on why Obamacare still is no sure thing.

Lefty Playbook
Think Progress lists Five Reasons Why Obama Should Reject The Keystone XL Pipeline.
The Washington Post argues that Obamacare is not causing a doctor shortage.
The Atlantic‘s Molly Ball on The New Progressive Congress.