The Obama economic team knows it needs to reduce the deficit and it knows that a minimally credible budget policy must have "fiscal sustainability" as its goal. In the U.S. economy that means getting the deficit down to about 3 percent of GDP. In current terms, one percent of GDP is $142 billion.

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The latest administration estimates show the budget deficit ending up at about 4 percent of GDP at the end of the next decade. It is small potatoes from an economic perspective--but to get the deficit down from 4 to 3 percent--would truly be a monumental political task. Given the current political climate, it is hard to see how wealthy individuals and large corporations can escape major tax increases if the goal is going to be achieved.

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Careful, Mr. President, a budget policy that is not credible could disappoint financial markets and do more harm than good.

View TaxAnalysts' Martin Sullivan's opinion in its entirety on TAX.com.