September 15, 2003

TAXAHOLICS:

Show U.S. The Money: There Are 87 Billion Reasons to Revisit Those Tax Cuts, Mr. President (Steven Mufson, 9/14/2003, Washington Post)

The president's request last week for another $87 billion for the occupation in Iraq is chump change in the context of what has been given away in the Bush tax cuts. It comes to about 5 percent of the cost of the president's tax cuts over 10 years. In the mountain of U.S. borrowing, it amounts to a hill of beans. It will add only a little more than 2 percent to the national debt.

[....]Perhaps Democrats will find a way to frame the issue of fiscal priorities differently from the way Mondale did. Bush is asking for money for national security. This isn't some liberal Democratic social program. This isn't waste. (Certainly those contractors in Iraq aren't wasting any money. Perish the thought.) This is essential. So if Bush wants agreement and it's important, shouldn't he show the toughness to make choices? Even raise taxes in post-recovery years.

It's tough to change habits, though. American Heritage magazine writer John Steele Gordon, in his book "Hamilton's Blessing," compared lawmakers to alcoholics, constantly reaching for deficit spending while in denial about their need to do so and the long-term self-destructive effects they create.

In the 1980s, the Gramm-Rudman legislation adopted spending targets that served as a device to force lawmakers and the president to make responsible choices and trade-offs. Most states have laws that require them to balance their budgets. If Karl Rove wants some good reasons to continue to advise the president on a course of denial and avoidance, he only needs to look at states such as Maryland, Alabama or California, where tough budget decisions are making life miserable for their governors.

Our presidential political cycle does not correspond to our economic cycle. Reagan did not pay the full consequences of his tax cutting and big military spending. The first Bush did not get the full benefits of signing a tough 1990 budget deal. Clinton got the benefits of tough choices made in 1993 at the outset of his presidency. But he didn't face the economic downturn that followed him closely out the White House door.

Bush seems to be counting on this delay. He isn't betting his ranch, but he's wagering that some other administration will have to clean up the fiscal mess he's left behind.

Conspicuously absent from Mr. Mufson's assessment are answers to a few questions: 1. Instead of comparing it to the "cost" of tax cuts, what's the $87B as a percentage of so-called "liberal Democrat social spending" or even the entire budget? 2. How many tax cuts in U.S. history have resulted in increased revenue to the U.S. Treasury in the ensuing years? [hint: all of them] 3. Why is it that we both agree lawmakers' spend like drunken sailors, but, when it comes to solutions, you want to trust them with one more drink and I want to take away the bottle? 4. How is it that "Tax Cuts" are "give aways" again?

MORE:


So when the Democrats today uncork their whines about the Iraq money, understand that the issue is not Iraq – the issue is their still uncontrollable fury at President Bush for snatching all that lovely surplus money away from them in 2001 and sending it back home beyond their reach. And their fondest dream since 9/11 has been to use the war on terror as a justification for rescinding the tax cut and grabbing the money back so they can spend it – not on the war (for which no tax increase is needed), but on their domestic spending agenda.

When the day comes that higher taxes are needed to pay the costs of war, of course we should have them. But that’s not what this argument is about. The tax cuts that the Democrats are most eager to repeal are the tax cuts that go into effect in 2005, 2006, and later – tax cuts that have no relevance to the war today, but that cramp and constrain their spending ambitions of tomorrow.

As usual, David Frum's Diary puts it much better than I could. Amazingly, for Democrats, raising taxes is always the lesser of two politically expedient evils. In fact, it may not be an evil at all.

One obvious alternative is simply reducing the latest $400B entitlement program by 25% - after all, the ink is barely dry on that one. But who's got the guts to go through that proposal with the same fine-toothed comb as the naysayers would apply to spending in Iraq?

Posted by John Resnick at September 15, 2003 1:04 PM
Comments

Don't you see the democrats can lash out
at "deficit" spending without literally impugning
spending in general.

It's there attempt to look like the party of fiscal responsibility.

By the way, what is the estimated cost of government social/welfare spending (i.e., everything but roads/postal/border/military/FBI
etc.)?

That is one pitfall of going down the so-called
"compassionate" conservative track is that you
don't have the anti-welfare rhetoric immediately
at your disposal.

Posted by: J.H. at September 15, 2003 1:54 PM

I'm not sure I've ever before run across someone who thinks that Gramm-Rudman achieved something.

Posted by: David Cohen at September 15, 2003 1:58 PM

David:

Back in the boat sales biz we had a saying: "There's an ass for every seat."

Posted by: John Resnick at September 15, 2003 2:04 PM

Just what, exactly, were the consequences of Ronald Reagan's tax-cutting and big military spending?

I am reminded of the "Bloom County" cartoon where everyone squawks when it is announced that Reaganomics appears to be working. Does this foolish reporter think we have forgotten?

Posted by: jim hamlen at September 15, 2003 4:24 PM

Exactly what "tough budget decisions" have been made by the Governor of California? I don't think they're what is making Gray Davis's life miserable.

Posted by: AC at September 15, 2003 4:44 PM

jim:

Twenty years of uninterrupted economic growth?

Posted by: oj at September 15, 2003 6:19 PM

Gramm-Rudman certainly accomplished making the Congress vote to suspend the limits every year. Other than that, not much.

Posted by: John Thacker at September 15, 2003 7:10 PM

Enough of the cheap political rhetoric. Tax cuts are related to revenue, not spending. Tax cuts are about growing the taxpayer base; more taxpayers paying less tax is much more stable than fewer taxpayers paying higher taxes. Stable revenue is what is required to maintain spending.

And that other piece of crap; tax cuts go to taxpayers. Just turns out some taxpayers are wealthier than others.

Sheesh.

Posted by: john at September 15, 2003 8:10 PM
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