Wouldn't tax hikes be less harmful to the US economy?

[WillK]

Well, obviously, we want all would sleep better at night with a balanced budget.

Would we? 

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The $1Trillion would not be borrowed through the issuance of government securities like Treasury Bills. Those who would have otherwise bought the securities would look somewhere else to buy some similar investment paper, perhaps buying previously issued US securities from some other investor or perhaps buying some other securities -- state bonds, other countries bonds, something else, who knows.

At the same the the $1Trillion would not be spent but the US there by reducing GDP by more than $1 trillion, due to indirect effects of laying off government workers, reducing orders to vendors and reducing the demand for government contractor work.

So yes, drag on economy.

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The effect on people's work and spending habits depends on who, what and how is taxed.  How this may or may not drag on the economy is hard to tell without more specifics about the tax plan.

[WillK]

Clinton raised taxes, and had a net increase of 22.7 million jobs. Bush cut taxes, and had an increase of only 1.1 million.

Actually, it was more of the 1997 Clinton tax cut on capital gains that brought lower unemployment; most noticeably, it changed the trend from relatively flat to lower unemployment.

Most of the decrease in unemployment during the Clinton administration occurred before the 1997 tax cut. 

When Clinton took office, unemployment was a little over 7%; by 1997 it was a little under 5% -- that's more than 2% drop prior to the 1997 tax cuts. 

Once those tax cuts took effect it dropped by less than 1%.

[WillK]

There seems to be a relationship between capital gains taxes and lower unemployment, one that isn't there with income taxes.

I agree that there isn't an apparent relationship between unemployment and tweaks to the income tax;
but I am not convinced that there is a relationship between tweaks to the capital gains tax and unemployment.