Date: Sun, 13 May 2001 15:31:45 -0700 From: foleyj@ultrasw.com (Jim Foley) Subject: [lpaz-Pima] Tax Cut Support from Unlikey Source To: lpaz-Pima@yahoogroups.com Reply-To: lpaz-Pima@yahoogroups.com
Folks:
Thought I'd pass on this impassioned defense of a federal tax cut from that hotbed of Libertarianism, The New Republic.
I have added no personal commentary. Anyone else have something to contribute?
TRB FROM WASHINGTON Downsize by Andrew Sullivan
Post date 05.03.01 | Issue date 5.14.01
01 We're almost certain to enact a tax cut this year. The news this week that a nonbinding but significant deal has been struck for tax relief of something like $1.35 trillion will now be hashed over by the various parties to see who deserves the credit. As a general rule in these matters, the guy claiming that others should take the credit has won. That's George W. Bush. Not long ago, Democrats claimed they wouldn't agree to any tax cut. Al Gore preferred micromanaging tax credits to ensure that Americans spent their money the way Al Gore wanted them to spend it. Only Bush campaigned on an across-the-board tax cut, made it his obvious priority, and has now gotten a significant one. Or, put another way: George W. Bush, 1; The New York Times, 0.
02 Ah, but the details. The Krugmans and the Chaits will shortly have a cow, if not a whole herd of them. The Times will weigh in again with yet another barrage of articles, editorials, and op-eds opposing any tax relief that would actually benefit those who pay most of the taxes. And, to be fair to these liberal critics, they're right about one thing. One of the tax cut's effects will surely be that the United States won't be able to afford a vastly expanded Medicare drug benefit. And the archaic sinkhole known as Social Security won't be shored up either. And Medicare, may the gods preserve us, may even have to grow at a slightly slower rate. In fact, many of the spending programs that some still believe solve most human problems will encounter the only political resistance that matters in budgetary matters: insolvency.
03 To which my response is: Hoorah. We don't need these expansions of the welfare state. We need to privatize Social Security if we want to provide for our retirement in ways slightly more up-to-date than those based on economics and life-expectancy figures devised in the 1930s. We don't need to add yet another entitlement for the most pampered generation - our current seniors.
04 And if there is one thing we have learned in the past 20 years, it's that controlling government spending is simply impossible without deficits. Look back at the last decade. A huge part of Bill Clinton's economic success was his remarkable grip on public finances. He deserves credit for this, although th Republican Congresses from 1994 to 1998 were mainly responsible, and Ross Perot made deficit-cutting hot. But from 1998 on, all hell broke loose. Last year, discretionary spending increased by a whopping 8 percent--under the Republicans. The minute deficits became surpluses, in other words, the politicians started bribing the voters with their own money. The only relevant question is: Why do Dennis Hastert, Trent Lott, Dick Gephardt, and Tom Daschle know better than taxpayers how to allocate their own resources?
05 This point seems to me particularly acute when you consider the amazing prosperity we now enjoy. There is a strong case for government helping those who really cannot help themselves - in providing a safety net, some basic health care for the truly indigent, good public education, and so on. But as prosperity increases, it seems logical that these needs would diminish. The more people earn and the better off they are, the less they need the government to save them from penury. Since even the poorest today enjoy health and prosperity unknown to the middle class a generation ago, you'd think government's role might shrink as the resources of private wealth make it increasingly unnecessary.
06 But the last 50 years show this theory to be empirical moonshine. Once government programs begin, they soon lose any relationship to actual needs and become ends in themselves, with veste interests, pools of employees, vociferous bureaucracies, and craven politicians to protect them. Every year, businesses that no longer serve a real need go under. Every year, government programs that no longer serve a real need expand. And, of course, taxes keep increasing to pay for them. Take this astonishing figure: In 1944, when this country was at its peak of wartime mobilization and prosperity was a fraction of what it is today, individual income taxes made up 9.4 percent of the U.S. national income. Today, at a time of peace, after a decade of extraordinary growth, with defense spending at historic lows, individual income taxes make up 10.4 percent. What national emergency do we now face that requires us to tax people more than we did to sustain a global war on two continents?
07 The answer is: none. We just have a culture of dependency - middle- class, corporate, poor--on the federal teat. This dependency, by taking resources out of productive use and sending them to government to divvy up among political interest groups, slowly throttles innovation, industry, and economic and social vitality. Yes, some of the spending does some good. But it is overwhelmed by agencies and programs that exist purely to pay off political constituencies, fund programs that have little or no relationship to genuine need, pay for bureaucracies that do little productive work, and funnel pork dollars to home districts to help politicians get reelected. Once upon a time - say, 1961 - liberals actually supported a tax cut proportionally bigger and less progressive, in income tax terms, than Bush's, in an era when the federal government was far smaller. But JFK was a liberal hero, and Bush is a right-wing maniac. Go figure.
08 The one source of hope is buried in Bush's budget. Fred Barnes pointed it out in The Weekly Standard. It's the magic number 15.6 percent - the proportion of GDP that government spending would eat up in 2011 if Bush gets his way. (The current number is 18 percent.) He won't, of course. The enervating parasite of big government will find a way to soak productive citizens of far more of their wealth than that. Some commentators - at this magazine and elsewhere - get steamed because Bush has obscured this figure or claimed his tax cut will cost less than it actually will, or because he is using Medicare surplus money today that will be needed tomorrow and beyond. Many of these arguments have merit - but they miss the deeper point. The fact that Bush has to obfuscate his real goals of reducing spending with the smoke screen of "compassionate conservatism" shows how uphill the struggle is.
09 Yes, some of the time he is full of it on his economic policies. But a certain amount of B.S. is necessary for any vaguely successful retrenchment of government power in an insatiable entitlement state. Conservatives learned that lesson twice. They learned it when Ronald Reagan's deficits proved to be an effective drag on federal spending (Stockman was right!) - in fact the only effective drag human beings have ever found. And they learned it when they tried to be honest about taking on the federal leviathan in 1994 and got creamed by Democrats striking the fear of God into every senior, child, and parent in America. Bush and Karl Rove are no dummies. They have rightly judged that, in a culture of ineluctable government expansion, where every new plateau of public spending is simply the baseline for the next expansion, a rhetorical smoke screen is sometimes necessary. I just hope the smoke doesn't clear before the spenders get their hands on our wallets again.
ANDREW SULLIVAN is a senior editor at TNR.
Jim Foley <foleyj@ultrasw.com>"Doh! Facts are meaningless! You can use facts to prove anything that's even remotely true!" - Homer Simpson, a Real American Hero
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