America is Not at War, America is at the Mall

A proposal to raise taxes to help to pay for the war:

The Iraq money pit, by James P. McGovern, Boston Globe: I recently came across a photo of a handwritten sign in a US military facility in Ramadi, Iraq. The sign read, "America is not at war. The Marine Corps is at war; America is at the mall."

The sign reflects a perception among many US soldiers and their families that the American people are not sharing in their sacrifice. It is a perception grounded in reality..., who is really sacrificing? Certainly not members of Congress. We will not wake up tomorrow in harm's way in Baghdad or Fallujah. ...

I propose we change this dynamic by raising taxes on nearly every American in order to pay for the war in Iraq. ...

It is reasonable to assume that the cost will approach $800 billion by the time Bush leaves office. I will soon introduce legislation to impose a "surtax" to begin paying for future war costs that have not been budgeted and paid for by existing federal revenues. This war surtax is modeled on similar surtaxes imposed during World War II and the Vietnam War to cover war costs. ...

My surtax proposal is not an additional tax on income; rather, it is a tax on tax liability.

For example, if a low-income taxpayer owes $100 in taxes, he would be subject to an additional 2 percent surtax of $2. Wealthy taxpayers would pay a higher percentage. Corporations, trusts, and estates would also be subject to the surtax.

Needless to say, this idea of a surtax makes my colleagues - Democrat and Republican - exceedingly nervous. No politician likes to talk about raising taxes. But somebody, someday, somewhere will pay the hundreds of billions we have borrowed so far for this war.

My conservative colleagues will argue that we should cut spending to cover the costs. That's nice rhetoric, but it's not real. Are we going to eliminate the entire departments of Labor, Education, and Health and Human Services? Or how about eliminating all funding for the departments of Agriculture, Commerce, Justice, Energy, Interior, Treasury, the EPA, and NASA combined? That's what it would take to fund just one year of the Iraq war.

Some of my fellow antiwar liberals believe that since the war in Iraq is wrong, they do not want to pay for it. But isn't it also wrong to force future generations to pay for it?

I voted against the war in Iraq. I have consistently fought to bring the war to an immediate end and to bring our troops home. I believe it is the worst political, military, and diplomatic tragedy in our history.

But to force our children to pay for that tragedy would only compound it. The war in Iraq has been this generation's mistake. It should not be the next generation's burden.

We have an opportunity to say to our soldiers and their families that we are in this together; that their fellow citizens are also sacrificing just a little bit.

That's a message worth sending.

While it's certainly true that someone will have to pay for the war at some point - somebody, someday, somewhere will have to give up something to pay the bills - raising taxes right now is not good short-run economic policy given the current weakness in the economy. Driving the economy into a recession would show sacrifice, but that's not the best way to show our support.

It's not good politics either. If a bill was passed raising taxes, and George Bush actually signed it only to have the economy then sink into a recession due to the housing slump or other causes, the political fallout would be large (The WSJ is already claiming that the belief that Democrats will raise taxes is making businesses hesitant to invest and contributing to the current weakness). Thus, while good long-run budget policy does require a plan to pay for expenditures, the political gain from raising taxes now seems small relative to the potential political and economic downside.

I am not objecting to implementing reality-based long-run budget policy, but the mistake was cutting taxes with a war on and the economy relatively strong. We shouldn't compound that error by now raising taxes just as the economy is showing signs of weakness. We will need to pay for this war, and I understand the underlying political point being made through a proposal which has no realistic chance of passage. But even if it did have a chance to pass, now is not the time to put the brakes on the economy.

---

And please drop this argument:

My surtax proposal is not an additional tax on income; rather, it is a tax on tax liability. For example, if a low-income taxpayer owes $100 in taxes, he would be subject to an additional 2 percent surtax of $2.

That's just an accounting gimmick that invites ridicule from the opposition. This raises taxes, so just say that directly. If the person earns $1,000 and the tax is 10% (=$100), then with the surcharge the tax on income is 10.2% or $102. The $2 comes out of income one way or the other and calling it a tax on a tax doesn't change that.

Comments

[elvis]

I propose we change this dynamic by raising taxes on nearly every American in order to pay for the war in Iraq. ...
Why punish us? Nearly every American wants us out! A more powerful move would be a tax on the super-rich. They control the country anyway.

I'll call it a Flat(ener) tax. It would fit on a single post card. It would have just a few check boxes.
1. Do you have an income (including dividends/interest) in excess of 10 million dollars per annum? (if no, then discard this paper)
2. Do you have a child serving active duty in a war zone (desk work excluded) If yes, then then discard this paper.
3. Please include a check payable to the Internal Revenue Service using this formula:
(cost of war)/(number of your friends)

Make sure the super rich tax also covers our wounded vets!

[dagrunge]

Lets pay for the cost of this war tormorrow, oh no better still, next year. Or maybe after I am dead - so I don't need to pay those taxes but my children will be happy to do so. Don't complain about lowering taxes long after it happened while using the economy to prevent those taxes being raised again. This kind of avoiding to pay your responsibility when you should is the main reason the USA is in so much shit today!

[mark]

The war is being paid for. The T-Bills foreign governments are holding will never have a positive return relative to other assets when the Federal Reserve increases money supply at the rate it does.

[anne]

Whether this column is more offensive or more stupid or more deceiving is the problem I am having in commenting. We can settle for terminally stupid, I guess. Still, offensive comes close. Deceiving blends with stupid. This is not just off-the-cuff stupid but planned enough to find a literate enough aid to write a column for the Boston Globe (an aid, since I assume James McGovern is too stupid to know how to write).

Me, I had no plans for malling today but you can bet I will be malling for spite.

[akatsuki]

So instead we should keep borrowing money at higher rates to finance the war as the US economy and dollar weakens? High taxes are not the horror that most economists make them out to be, and there are other purposes (i.e. soft paternalism) that can be served with them. Why not hit two targets at once and just use a gas tax? Since the Australian PM has fully admitted this war is about oil, let oil pay for it, plus it is far superior to the ridiculous carbon credit system which, thus far, is a total failure.

[elvis]

Is it so difficult to tax the super rich?

[kharris]

So those who have managed to discover good tax avoidance schemes will shoulder less of a burden than the rest? If we are going to tax tax liability, and they have very little tax liability, they will dodge much of the tax as a share of income. Ignoring, for the sake of analysiss, the objection about timing, doesn't it make sense to actually tax income directly, rather than indirectly, and to make sure the "war tax" has no loopholes? Don't we already have $300 bln or so in unpaid taxes every year that better enforcement would collect?

[baileyman]

If a significant portion of the economy is Ponzi financed and it suddenly ceases, the numbers will show a contraction in the economy, but do you really want to call this a recession? There is quite a lot of housing finance un-wind to go, and no one should try to keep this value destruction business alive.

If new taxes were going to create public assets with significant yields, wouldn't these be good investments to make, regardless of what the so-called "spending" would look like in the cash accounts? Worse is spending on projects with negative yield, such as our wars of choice.

[pgl]

Would this surtax necessarily cause a recession? Have we ruled out a change in the macro-mix where a drop in interest rates could encourage more investment as well as more dollar devaluation = net export stimulus? Seriously - is a rise in national savings necessarily bad economics? Please tell me you are not drinking the supply-side Kool Aid.

[ken melvin]

The onliest way to pay for SCHIP was a tax on smokers.

[Bah Humbug]

The never has been and will never be a "good" time to raise taxes.

Also, what kharris said.

[anne]

Oh, dear. The direct cost will of the war in and occupation of Iraq will be $800 billion by this year's end. At least get the cost right. As the idea of beginning a draft for war is bizarre and self-defeating, so is the idea of raising taxes, especially raising taxes going to a national election. Raising taxes when the economy is weak is as well comically bizarre.

Me, I am heading to the mall today, and driving in all sorts of carbon burning ways even with this darn Prius just to show my spite for idiocy.

[anne]

Also, the idea that Americans, who have afforded every asked for support to soldiers, are not sacrificing enough for the insanely needless war and occupation that Republicans have dirven by fear and deception is offensive. I am sacrificing enough.

[The Baron]

Maybe my GoogleFu is weak today, but I am finding it interestingly difficult to find data on the cost and financing of the Vietnam war. The dates and my age are about right... I'm the generation that should have, or should be, 'paying' for that war's deficit funding. Was there all of this discussion and press back then about forcing my generation to pay for that generation's need to kill brown people?

[johnchx]

re: the elvis tax plan

I was curious to know whether the "elvis tax plan" -- basically financing the war with a surtax on tax units with incomes (AGIs) of $10 million or more -- was actually feasible, if we look at real numbers. Here's the scoop:

According to the IRS, in 2005, there were just under 14,000 returns filed with AGIs of $10 million or above, reporting a total income of $376.3 billion (and taxable income of $334.4 billion). These filers paid approximately $78.3 billion in taxes (21% of AGI, 23% of taxable income).

The CBO estimates the cost of the Iraq war at $95 billion in 2006 (25% of the $10-millionaires' AGI, or 28% of their taxable incomes).

So, financing the Iraq war in this fashion would entail a 121% increase in the tax paid by this bracket, increasing their average tax rate from 21% (of AGI) to 46%.

Now, I don't think that the CBO's cost estimate includes the increase in the government's long-term liabilities for veterans', survivors', an military pension benefits due to the war (since federal budgeting and accounting practices don't treat these as expenses).

I'm not sure what the bottom line here is exactly, except to say that the "elvis tax plan" can't be ruled out on the grounds of arithmetic. The money is there.

Of course, paying for the Iraq war only closes 13% - 14% of the federal government's overall fiscal gap (for 2006), so I wouldn't call this a comprehensive tax plan. But I don't imagine that it's meant to be.

I'll say it again: if you want peace, work for fiscal responsibility.

[anne]

Direct costs for Iraq and Afghanistan will have passed $300 billion by years's end, along with $200 billion in spending for the coming fiscal year. Indirect cost discussion have been muted since Linda Bilmes and Harvard were criticized by an assistant Secretary of Defense at the beginning of this year.

However by October 2006, more than 100,000 returned soldiers from Iraq and Afghanistan had already been granted various disability awards from the Veterans Administration. Physical casualty figures for Iraq for soldiers were above 50,000 in December 2006.

[robertdfeinman]

The cost of the war will be paid for the way all such debts by governments are, by devaluing the currency. The Chinese and the oil exporters are already on to the scheme which is why there is increasing activity in using the Euro to price deals.

The question is whether the demand for treasuries will collapse more rapidly than the US can accommodate. Obviously the Chinese can't just dump their holdings, but their increasing interest in buying into US firms may indicate part of their long-range strategy which also includes reducing their new purchases of treasuries.

[anne]

John Chx:

"I'll say it again: if you want peace, work for fiscal responsibility."

Agreed, and important; which is why beyond the morality of war and occupation and this war and occupation in particular we should be particularly incensed by the continual cost benefit claims from Alan Greenspan to the University of Chicago business-ers to the American Enterpris-ers to the Defense Department that denied the costs for the mad supposed benefits.

[bakho]

Clinton collected taxes at much higher than current rates and didn't suffer a recession. The Bush tax cuts should be rescinded and Bush supporters be made to pay for Bush's war. The SCHIP veto should be overturned. SCHIP will put a lot of money into the economy, directly to pay for health care or indirectly to pay health care costs for people who are already spending everything they make.

Bush needs to admit that his war has costs. Bush needs to pay a political price with his tax cut patrons in order to continue his misguided foreign policy.

[anne]

Speaking of costs and benefits, the latest United Nations estimates are 2.5 million Iraqi refugees, 2.2 million Iraqi internally displaced, while the Johns Hopkins excess Iraqi death estimates for June 2006 ranged around 650,000. Given a population of about 27.5 million, we are thinking of loss of home or death for nearly 20% of the population which is beyond my imagination. *

* Last I read, by the way, Sweden had accepted more Iraqi refugees than America.

[bakho]

Besides, if Congress becomes more fiscally responsible, then the Fed is on more solid footing to lower interest rates and ease the housing crisis. Tax cuts without Fed action could lead to recession, but the Fed is always a player.

[Lafayette]

Article: Wealthy taxpayers would pay a higher percentage.

Great idea. Those who work at Halliburton should pay 100% of their income in surtax. And, if they used to be CEO, 200%.

[bakho]

Why are people not blaming the Bush veto of SCHIP for pushing the economy toward recession?

Much of the war money is lost to our economy and disappears down the Iraq rat hole. At least SCHIP money would stay in the US economy.

[anne]

The astounding estimate for Jordan is that 10% of the population is Iraqi refugee. Interestingly, remember that the Senate after due consideration has just advised splitting up Iraq ethnically as though 4.7 million internal and external Iraqi exiles were not enough and as though the Senate knows what is proper for Iraq after these years of insanely tragic war and occupation.

[anne]

Also, we should remember that many of the refugees and displaced are promising, talented and skilled and will not be readily replaced. Hospitals repeatedly emptied, classroom with ever fewer teachers. A country where women had remarkable independence and promise, for all the general limitations, is no longer such a country.

[anne]

Puzzled about where the flow of information comes from, simply look to the cimpletely open files of the New York Times or to the astonishing blog of Juan Cole of the University of Michigan.

What Juan Cole and Mark Thoma have established on the Internet is a remarkable scholarly achievement and we need to recognize and point repeatedly to the achievement.

[John Morrison]

As I understand it, one of the major tax-avoidance loopholes involves borrowing to defer income taxes and possibly translate the income to capital gains. For example, one scheme is to buy life insurance, and then borrow from it to live on.

One fairly simple way to eliminate that loophole, and hit the culture of borrowing in the process, is to tax borrowing as income and deduct repayment of principle. Certain details have to be worked out, but it should be simple to implement. For credit cards, the year-to-year difference in balance would be reported.

I think that to pay off the war debt (and the aggressive-war penalty that should be levied on the US), taxes should be raised on a class of participants that, as a whole, enabled the Bush Administration's malfeasance through various tactics. My target is corporations and businesses making over a billion dollars a year profit, and the tax would be around fifty percent of the profit above the first billion dollars.

This is in addition to my proposed personal income tax rate schedule: zero for the first $50,000 -- 15% of the next $150,000 -- 50% of the next $2.8 million -- and 90% of income above $3 million. (The numbers are adjustable.)

[kthomas]

anne, calm down please.

The real point is you cannot have war without sacrificing SOMETHING.....which neither you or I have done. President Bush is a fool, and the Dems care for.....what exactly do they care for? Seems the only Dem with balls is Waxman.

I oppose this so-called war with all of my heart....but what the cowardly Dems and corrupt Repubs are doing is criminal: deferring payment to a future generation.

And if this is really a war....why is there no draft? Maybe we can just hire Mr Prince and his merry mercenaries to do all of our military efforts. We all know how effcient Blackwater can be.

[Patricia Shannon]

I think we have been in recession for awhile, and I'm not the only one who thinks so. The definition of "recession" used by the U.S. government defines "recession" in terms of the effects on the rich, but that's not what most of us mean by the word.

[NC Jim]

I don't know who will pay for Iraq but I know who paid for Vietnam - I did, at least in part and the means of payment was inflation. I am 65 and was working through the era. A few years ago I took my income history (social security records) and deflated it by the official CPI to get real income. Bottom line is my real income dropped 25% from 1975 to 1990. How? Easy, several years of 8% raises every 18 months when annual inflation is 15% will do the trick. This loss of base wage carries over every year for the rest of your life and into retirement as SS is based on salary history. To date I roughly estimate a cumulative loss of $250K and counting - about the cost of a new house. Many families compensated by sending the wife to work - an option available only once.

I suspect inflation is starting to take off again. We shall see.

[kthomas]

NC Jim, great post. Sobering.

[KnotRP]

There already is a surtax - look at what's happening to the dollar - the current generation *will* pay for this, despite their desire to defer it. The rest is just quibbling about whether to pay it NOW either via taxes or a depreciating dollar.

[robertdfeinman]

Naive economics question:
Suppose the US raises taxes. Then the treasury needs to borrow less to cover the deficit. The Chinese need to invest their trade surplus. There are fewer treasuries issued for them to buy. What happens?

I would assume that the price of treasuries would go up since they are now more in demand and the supply is smaller. This means the yield is lower. Similarly new treasuries will be issued at a lower coupon because of more demand.

The Chinese do what? Settle for lower interest rates? Take their money elsewhere? Raise export prices to compensate? Is any of this good or bad for the US economy as a whole and/or various sectors within it?

Does the way the taxes are raised make a difference? If we repealed Bush's tax cuts to the wealthy would this have a different effect on the economy then adding a war tax surcharge? Is there something different about cutting down on the demand for yachts that are big enough to land a helicopter on compared to a million pairs of sneakers for working folk's kids?

[James Killus]

No, no, we're missing the much bigger picture. It's a well-known principle that if you tax something, you'll get less of it. Since this is a "tax on tax liabilities," then clearly if it is instituted, tax liabilities will go down!

This is great! This is better than supply-side economics, which promised greater revenue with fewer taxes. This promises less tax from greater revenue! I love this plan! It's another gift from supply-side heaven!

[anne]

The way to end the war and occupation of Iraq is to threaten to pay for it, though we are paying for it already. The new moralism, raise taxes for Iraq and Iran and who knows where else, until I swear never to go to war again. Then, raise taxes for carbon paper until I promise never to buy any again ever. Make me suffer for your sins, the moralist's dream.

[sglover]

Whether this column is more offensive or more stupid or more deceiving is the problem I am having in commenting. We can settle for terminally stupid, I guess. Still, offensive comes close. Deceiving blends with stupid. This is not just off-the-cuff stupid but planned enough to find a literate enough aid to write a column for the Boston Globe (an aid, since I assume James McGovern is too stupid to know how to write).

I really don't get the hostility here. Maybe the details of the tax plan are poor; I don't know. But it seems perfectly reasonable to me that if we're going to indulge in "optional" wars, we ought to be ready to pay for them.

In any case, this is really much more about civics than finance. I suspect that if citizens know that they're going to have to pick up the tab for our Beltway Napoleons' fantasies, we'll have fewer optional wars to begin with. Evidently conscription is pretty much out of the question (unfortunately, I'd argue), so taxation is the only other lever available to force some prudence on our "leadership" class.

[John Morrison]

"I really don't get the hostility here. Maybe the details of the tax plan are poor; I don't know. But it seems perfectly reasonable to me that if we're going to indulge in "optional" wars, we ought to be ready to pay for them."

That really sounds right. Any country that engages in "optional wars" should pay through the nose for them. Consider the real harm done by war -- mass slaughter, children with limbs blown off, etc. The penalty for aggressive war should be in blood, and only in money or taxes to rebuild the victimized nation and recompense the victims as much as possible.

One way the US could pay would be to shut down its military and redirect those funds to Iraq or possibly the United Nations to benefit Iraq.

[mark]

robertdfeinman says...
Naive economics question:
Suppose the US raises taxes. Then the treasury needs to borrow less to cover the deficit. The Chinese need to invest their trade surplus. There are fewer treasuries issued for them to buy. What happens?

I would assume that the price of treasuries would go up since they are now more in demand and the supply is smaller. This means the yield is lower. Similarly new treasuries will be issued at a lower coupon because of more demand.

Increasing the demand of the T-Bills to the seller means the seller gets a higher price. In the case of the bonds the yield will go down.

At a lower yield on T-Bills the Fed can still devalue the dollar at the same rate by inflating the money supply. Which in turn means the governments future liabilities are less.

Considering the government is claiming only about $160 billion deficit on 9 trillion of debt. And of that $160 the government is counting interest payments and negleting to count the extent to which it is devaluing the purchasing power of its outstanding debt. Which means the government is running real surpluses despite the War.

I'd say it's time for a tax cut.

[Blissex]

«This is in addition to my proposed personal income tax rate schedule: zero for the first $50,000 -- 15% of the next $150,000 -- 50% of the next $2.8 million -- and 90% of income above $3 million. (The numbers are adjustable.)»

Everybody should pay a little income tax so it is a shared (if symbolically) burden.

However your proposed tax rates are roughly those current in the USA in 50s and 60s, when excessive taxation during the Communist dictatorship so bravely fought by Senator McCarthy had destroyed the USA economy :-).

[S Brennan]

Strongly disagree with you on this Mark.

So long as one group can be free rider, we'll have stupid wars like this one.

I know it's regressive, however, I'd put a tax on automobile Gasoline. Much auto gas consumption is discretionary and a tax will depress demand and so lower the refined product's base price.

0.50/Gallon

It's oil we're fighting for and cars create the demand, have auto drivers pay for the war.

[anne]

Understood, not a word from the supposedly war or occupation opposing Representative about leaving Iraq, leaving completely and immediately, just word about me having to suffer for the damnable sins of the Administration and Congress. Well, I do not want to and the heck with all those who want me to. The heck to with all those crude moralists who worry about me burning carbon, but never worry about why or where the matter lies.

So, watch me shop and watch me smoke all the carbon I can find to smoke. I am that kind of woman, and the heck with you trying to stop me. Watch me not suffering. What are you doing to have us leave Iraq immediately and completely, or do you care?

[anne]

"I voted against the war in Iraq. I have consistently fought to bring the war to an immediate end and to bring our troops home. I believe it is the worst political, military, and diplomatic tragedy in our history."

Yes; I know I am being unfair, and I know where your heart lies, but I am still not about to sacrifice; not even close. Let the kids and grandkids sacrifice. Just focus on ending the war and occupation, and enough cuteness.

[Mark Thoma]

Just getting back after teaching today. Here's a tip. When you go to school in the morning, bring your class notes with you - I got here a half hour before class, realized I'd left my notes at home, and didn't know what to do. Go get the notes and be late, or stumble through class without them (Monetary Theory is no problem - don't need notes at all - but History of Thought is another matter)?

So, I drove home hoping no cops would stop me for speeding, grabbed the notes and my computer, threw my bike into the car since parking is pretty tough, parked pretty far away where I was certain to get a spot, rode to my office, got the camera for class, and got to class with a few minutes to spare. I'm not sure how I got home, back, to my office, and then to class in less than 30 minutes, but somehow I did. I can't say I wasn't panting from running from my office to class though (which are pretty far apart this quarter), and I was less ready than usual to start teaching.

So - apologies - I haven't read any comments yet today. Do I dare? Maybe not...

[kthomas]

lol

[PeterRabid]

Anne, you're not being reasonable. What's new! Anyway, that's one of the few ways this world ever makes any progress - through women not being reasonable.

Seriously, what's wrong with the Elvis tax plan? Do you really have an income of more than $10,000,000 per year? You probably do - you're such a sharp investor.

The real question here is: Would this increased tax revenue shorten the war or prolong it?

In relation to this question, the debt question and the GDP question are inconsequential.

And in relation to this war, the response "If we're going to have a war of choice, we should be ready to pay for it" is completely beside the point.

How many of us favored this war? I sent out hundreds of emails against it and marched with a million others, and most of you did similar - OR WISH YOU HAD. Why should we have to pay for a completely illegal war?!

The right answer is a massive Joan Baez tax strike. I wish I had the gutsfor it.

And one final suggestion, Anne. Push your Prius of a cliff. That'll show em!

[anne]

I understand, Peter. Nonetheless, the argument is too stupid for reason and I am not about to sacrifice myself for war and occupation. Never....

-- "America is not at war. The Marine Corps is at war; America is at the mall." --

"The sign reflects a perception among many US soldiers and their families that the American people are not sharing in their sacrifice. It is a perception grounded in reality..., who is really sacrificing? Certainly not members of Congress. We will not wake up tomorrow in harm's way in Baghdad or Fallujah. ...

I propose we change this dynamic by raising taxes on nearly every American in order to pay for the war in Iraq."

[anne]

Last I remember, by the way, we were driving as many of the 250,000 resident Iraqis from Fallujah as would leave so that we might save the city by destroying the city. No; we will not be waking up in harm's way in Fallujah tomorrow.

[Icarus]

The way to end the war is to empower the currently feeble democratic party to stop funding it. No delays, no more BS, no negotiations.
Stop funding the war, and only fund two things related to Iraq:
1. The costs of transporting troops home.
2. The costs of enabling a non-US lead International Disaster Relief and Medical services wing (billions a month, I'd assume) which will assist the necessary healing in Iraq.

The $100 billion or so which we'll need is cheap compared to the cost of war. And, that cost should be an gasoline tax.

Americans tacitly and actively consented to this war, and continue to do so. The poor are to blame as well, for keeping this corrupt, fiscally inept regime, the bush administration, in power.

Then, the lesson learned should involve handing out a prius to everyone.

[ken melvin]

I understand that Congressman Obey, WI is pushing for a surtax to fund the war. Could be, he's poking Bush with a sharp stick. Too, Obey was a republican until McCarthy became too noxious. Interesting, no?

[BJ Feng]

What's with this obsession with sacrifice? It's nothing more than a strategy from anti-war proponents to end the war in Iraq. They hope that if the American people felt more pain, then the war would become even more unpopular, forcing a withdrawal. The strategy makes sense, but we should see it for what it is.

Americans haven't had to sacrifice because there is no need. It's a reflection of the power of this country, that the wars in Iraq and Afghanistan can be sustained without any effect on the lives of the vast majority of Americans. In short, we haven't even begun to fight. Yes, the all volunteer Armed Forces have had to make sacrifices, but the losses that they've sustained are far less than the losses that occur every year from car accidents. Compare that with the sacrifices portrayed in Ken Burns's documentary of the Second World War. Americans should be happy that no sacrifices are needed, and should be thankful of the previous generations that have put us in such a good position of power that we can continue to fight two wars and go to the mall at the same time.

[wjd123]

We know that for Republicans there will never be a time to raise taxes since lowering taxes is their answer for every problem. If Republicans started raising taxes they would find themselves without an answer to any political questions. Now we are increasingly hearing from Democrats that there is only a right time to raise taxes, and it's not now. However after bringing back Pay/Go rules Democrats can't have Bush's tax cuts expire fast enough because they want new programs and have to find a way to pay for them. So evidently tax increases are timely as long as there is reciprocal spending to juice the economy in their stead.

So for Republicans tax increases are never ok, and tax cuts are always ok. For Democrats tax increases are only ok if there is reciprocal spending. Any attempt to raise taxes to pay down the deficit is never ok for Republicans for whom deficits don't matter anymore and raising taxes to pay down debt is only ok for the Democrats when the economy is booming.

Both are playing a dangerous game because there is every reason to believe that a crisis caused by higher interests rates will come long before the boom. That crisis will be brought on by our willingness to inflate our way out of debt. The consequences of which will be a slow down in the economy as borrowing becomes more expensive.

The right time to impose a surtax to help pay for the war is before the crisis and not after the boom. Without investor confidence there won't be a boom.

[BJ Feng]

The Skeptical Optimist (http://www.optimist123.com/) has convinced me that our current debt levels are manageable if we do not increase spending. The debt/GDP ratio is the most important statistic and ours is moderate in comparison to other countries. It sure could be better, but as previously mentioned, Americans are wary of tax increases to cut the debt because they rightfully worry that the money will simply be spent anyway.

Democrats are correctly hesitant to raise taxes. Any tax hike has to be justified. What are the new funds going to be used for? They can't say to cut the deficit because that's not what they want to do, and anymore social spending has to pass the scrutiny of the American public. With the government already collecting record revenues, there's simply no case for even more taxes.

[sglover]

Two comments:

I understand, Peter. Nonetheless, the argument is too stupid for reason and I am not about to sacrifice myself for war and occupation. Never....

You wanna quit the hand-waving and explain precisely what's wrong with it? As I understand it, you're all about incentives. Seems to me that a war tax is a way of making citizens directly aware of the effects of their government's most disastrous policies. "Citizens", plural -- it ain't all about you.

Anybody who did what they could to stop this war in the beginning -- all the high school civics stuff, writing letters, calling congresscreatures, the lot -- soon discovered that the biggest adversary wasn't Dickie Perle or that blowhard Limbaugh, but the blithe indifference of their fellow citizens. Other than our "leadership" caste, there was never a lot of real enthusiasm for the war. Its "support" might have been a mile wide, but it wasn't more than an inch deep. It never would have got off the AEI drawing boards if there'd been any serious discussion of costs, let alone their imposition.

And in relation to this war, the response "If we're going to have a war of choice, we should be ready to pay for it" is completely beside the point.
...
The right answer is a massive Joan Baez tax strike. I wish I had the gutsfor it.

Uh-huh. You've already implied that the bastard war can carry on with essentially nobody on these shores noticing even a penny's difference in their own well-being. Yet at the same time you expect these same blissful "citizens" to somehow crank up to Thoreau-esque civil disobedience?!? Anyway, in an age when most people never even physically touch their tax payments, how exactly does one go about a tax strike?

says...

BJ Feng says...

Democrats are correctly hesitant to raise taxes. Any tax hike has to be justified. What are the new funds going to be used for? They can't say to cut the deficit because that's not what they want to do,

Since when. I and the liberals I know do want to cut not only the deficit, but the national debt.

Do you say something like this because you really believe it, or for the purposes of right-wing propaganda?

[Patricia Shannon]

Forgot to sign my comment.

[Lafayette]

SB: Much auto gas consumption is discretionary and a tax will depress demand and so lower the refined product's base price.

This is naive thinking.

Petroleum consumption (gas, fuels) pricing is almost inelastic. A price increase IS going to decrease demand, but not for petroleum products. It will depress "other consumption", which is reduced to compensate for increased fuel costs.

In fact, its impact could be so drastic as raise unemployment, not much but at least moderately in an economy that need not presently be too proud of its rate.

Besides, gas taxes are probably high enough. I suspect a better policy is to mandate better consumption from Detroit. Their fleet mix should be higher and the fact that SUVs escape fleet consumption levels already mandated was a gift to Detroit.

(There is another factor that is not really considered, at least in the US, which is vehicle usage. Taxing car entries into large cities could entice people onto public transport -- providing that public transport is available. Perhaps this should be a policy matter in the US, which has let rail public transport diminish? )

See what lobby money can do to pervert good policy making? The Federal government mandates a manufacturer's fleet mileage levels, then allows SUVs -- which are built on truck platforms -- to have the higher toxic emissions associated with that category of vehicle. Result, more pollution. But, also, more profits. (SUVs have far sweeter price margins than cars.)

An SUV is a truck or a car? Time to decide, based upon usage and not technical category. If for personal transport, it should be categorized as a personal transport vehicle.

A carbon molecule tax WILL reduce toxic emissions, in conjunction with other tax measures, if used wisely. This has already been amply proven in Europe. The US simply does not want to realize that fact. Why?

Because it is inconvenient, both to consumers and to corporate energy users.

[Lafayette]

BJF: The debt/GDP ratio is the most important statistic and ours is moderate in comparison to other countries.

What blindness.

The debt is being held by foreigners, notably the Chinese, who have got Uncle Sam by the short and curlies. Do you think the seriousness of THAT political fact is "moderate".

It should scare the hell out of me, but then, I also think that the US is impervious to foreign influence. That it is sovereign in its policy decisions, both domestic and foreign.

Ah, well ... to each their own delusions.

NB: After the subprime mess, the dollar shot up from 1.38 to the Euro reaching 1.42. (Five years ago, it was at 85 cents to the Euro.) Are you enjoying the rise in prices at the pump? Would the US like OPEC to start setting prices for a barrel of oil entirely in Euros, as it would have liked to do for over a decade?

[Kaleberg]

This sounds like typical anti-tax hysteria. Tax increases boost the economy. It's that simple. The reason the economy is weak, despite all the war time spending on Iraq, is that taxes were not raised.

I made money betting on Reagan's tax increase; I made money betting on Clinton's; I will make money on Bush's scheduled increase in 2011.

P.S. No, I don't work for the government. I make my living playing the market.