The Reckless GOP Tax Plan
by Natasha Hunter
April 9, 2003
When it comes to hurling money at the wealthy, Tom DeLay just can't contain himself -- even if it means trotting out a crass and incoherent excuse about our troops in the field.
"Nothing is more important in the face of a war than cutting taxes," he told Congress Daily recently, speaking on the president's proposed three-quarter of a trillion dollar tax cut.
Without access to Mr. DeLay's library, it's hard to guess what history DeLay is basing his comments on. Slashing taxes in wartime is an unprecedented act. No president has ever requested a tax cut during any war in the past century. And while Congress sometimes balked at extreme wartime tax hikes, it never recommended an unnecessarily deeper plunge into debt.
Taxes increased during the First World War, and the first mass income tax was instituted during World War II. The number of Americans paying income tax rose from 4 million to 44 million between 1939 and 1944, and collections skyrocketed from $1 billion to $19 billion. The Treasury Department commissioned cartoons and advertisements to sell the change, with Donald Duck sputtering that it was Americans' duty and privilege to pay taxes while soldiers were risking their lives overseas. Irving Berlin even wrote a song for the Treasury called "I Paid My Income Tax Today."
The first major post-World War II tax cut occurred just after Kennedy's assassination, during peacetime. Johnson initially refused to raise taxes to cover the costs of the Vietnam War, but in 1968 gave in and upped the income tax.
This time it's different.
"The usual pattern is you tax the public to pay for the war," says Georgetown history professor Michael Kazin. Bush's budget, he says, reverses a hundred-year trend.
Other historians agree. "It's the first time we're entering a war this size where we have a really conservative president and Congress, with a strong vision of reducing government, and the tax cut is a prime example -- the impetus to cut has never been as strong," says Dr. Julian Zelizer, a history professor at SUNY-Buffalo and author of the book Taxing America. "I'm not sure it will work. The pressures to spend during war are tremendous."
Indeed, Bush already requested an $80 billion supplemental wartime spending package -- the single largest such appropriation in history. To get some perspective, that amounts to roughly double New York City's annual budget, according to The New York Times. It outdoes the entire 2003 budgets of the Departments of Agriculture, Education or Justice. The Pentagon says that money will merely get our troops to Iraq and back, and that's if the war lasts only a few months. It doesn't include the funds needed to rebuild, or maintain our occupation.
The math here would seem almost too elementary to point out, if it weren't for radical GOP lawmakers like DeLay, who seem oblivious to the numbers and recklessly dismissive of fiscal prudence.
It's that old supply-side delirium again.
DeLay, like other devotees, maintains the faith that somehow cutting taxes will someday increase government revenue. They ignore the fact that Bush the first, Mr. "Read My Lips" himself, had to raise taxes to rescue the nation from a Reagonomics-induced slump, arguably sacrificing his own presidency in the process. Meanwhile supply-siders attribute the Clinton-era surpluses to a post-Reagan economic bubble, completely ignoring the tech boom of the '90s.
If that weren't enough to tip the balance of reason, the Congressional Budget Office has recently estimated that Bush's stimulus package, including the tax cut, is "unlikely to be dramatic," and could be negative. Meanwhile the CBO has warned that war costs are likely to exceed the administration's estimates, and spoke of "substantial costs in later years" and "occupation" costs of $1 billion to $4 billion per month.
Given these costs, plus unheard-of state budget shortfalls and a $400 billion deficit darkening the horizon, no one seems to have the foggiest idea where all this money will come from, if not from taxes. Which could explain why 10 Nobel laureates, along with economics guru Alan Greenspan, oppose the administration's budget.
"It must have been hard," writes Nobel Prize-winning economist Joseph Stiglitz in the March 13 edition of the New York Review of Books, "for Bush to design a tax program that costs so much in revenue while at the same time doing so little to stimulate the economy."
Yet DeLay and other Republicans love to squawk that not supporting the president on this fiscal suicide mission amounts to a virtually treasonous display of anti-Americanism during a time of war.
"When our troops are over there fighting, we don't want partisan bickering to be what they see on television from back home," Sen. Kay Bailey Hutchison (R-Texas) told The New York Times. "We want them to see our support, our total commitment, because if the economy sags, it's going to affect everyone over there fighting now."
Actually, Congresses in the past have had no trouble opposing the president during wartime, at least on domestic issues arguably unrelated to war. And sometimes they do it through the budgetary process. In the first throes of a conflict, says Brown University historian James Patterson, Congress is usually generous with funds, and then less enthusiastic only after the war has dragged on. As he points out, one way that Democrats started to resist the Vietnam War was by refusing to allocate funds for it. This time, while they're handing Bush the money he wants, along with at least part of the tax cut he called for, they're anxious.
"Congress doesn't have a lot of money, and they're not going to have a lot of money, and they have a lot of constituents who need things," Patterson says. "They'll give money, but they want to earmark it, and that kind of criticism is reflective that we're in a new period, fighting a war without a lot of money." In World War II, he adds, there was quite a bit of revenue, and in Vietnam the country was doing fairly well financially, but here the country is experiencing a recession coupled with no tax revenue.
"This is almost unbearable pressure for a lot of [conservatives]," Patterson says. "That's why you see these early skirmishes over the budget, which is not traditional for 20th century American history."
Sure enough, moderate GOP lawmakers are digging in their heels. Sen. John McCain (R-Ariz.) came out immediately against the tax cut, insisting that the nation can't possibly cut taxes until we know what the war will cost.
"Let us wait until we have succeeded in Iraq, and until we have some idea of what percentage of the costs of the aftermath of the hostilities we will have to bear," McCain said on the Senate floor in March. "[I]t is far sounder statesmanship than cutting taxes in the dark, or running up spending, without due regard to our primary responsibility to the American people: their physical security."
Sen. Olympia Snowe (R-Maine) seems to share his sentiment, along with Sens. Lincoln Chafee (R-R.I.) and George Voinovich (R-Ohio). While Snowe supported a $350 billion compromise on the Senate floor, her vote on the Finance Committee is considered to hold the key when the committee draws up legislation in a few weeks. Estimates of the final package hover around $550 billion.
DeLay and Co. continue to march, zombielike, down the well-paved path to financial ruin, all the while blaming Democrats, who have history -- as well as a number of Republicans -- on their side. It's an effective strategy, especially since they can't own up to the real story: that they, along with Bush's advisors, earnestly hope to drown the government in so much debt in the coming years that it will be forced to shrink, effectively dismantling the Great Society.
"Democrats are always asking for more money with little or no credibility on why they want it," DeLay told Roll Call. "I rely on the president to know what he needs rather than some pseudo-expert running around the House or Senate."
Who, we'd like to know, is the "pseudo-expert" here? If the past is a reliable indicator, DeLay and Bush's number crunchers are the "experts" whose credibility we should question.
Natasha Hunter is associate editor at TomPaine.com, where this article first appeared (www.tompaine.com)