If people had to pay for the cost of the war with an explicit, dedicated tax
for that purpose, would they still support it? I think it's a good idea to
make clear what the war costs - e.g. the $11 billion per month the war effort costs would pay
for a lot of health care and other domestic needs - but I'm not sure that
raising taxes during a recession (or during the inklings of a recovery) is a
The economic effects of a tax increase are one of the worries, though the size of those effects
depends upon where the burden falls. If the Bush tax cuts didn't do much to help
middle and lower class income and employment -- and I don't see any strong
evidence that they did -- it's hard to see how reversing such taxes would have
much of an effect either. But the tax surcharge proposal is broad-based, everyone would
face higher taxes not just the wealthy, and the effects of a broad-based tax change might be larger. Why take a chance when the job
market doing so poorly?
The main worry for me is not the size of the debt or the economic consequences (though the latter is of concern), it's the political message
that raising taxes right now would send. Raising taxes to pay for the war would
send the message that the federal debt is such a large problem we have to
implement a tax surcharge even while the economy is struggling to recover from a recession. That is the opposite of the message I think we should be sending -- the
economy and labor markets still need more help -- and it's hard to imagine how
to get that help after sending a message that the debt is so worrisome.
We do have debt problems down the road, and rising health care costs are the
driving force behind the budget trajectory. We will need to address this
problem. In addition, we should pay for the wars and the stimulus package when
the economy is on better footing. Thus, I would support legislation that raises
taxes (or cuts "wasteful" spending, though good luck with that) to pay for these items at
some point in the future. That would highlight the cost of the war without
simultaneously sending a message that the budget problem is urgent, so urgent
that it ties our hands from doing anything more. It would also blunt the
inevitable "tax increases will kill jobs" objection that is sure to come.
yes, let's raise taxes now to pay for these things, but the tax changes shouldn't
take effect until the economy surpasses some metric for health -- unemployment
falling below a particular number could be one trigger -- or it could come at
some date certain in the future, e.g. two years from now, (assuming that gives
the economy enough time to regain more solid footing).
If I thought that the
Obey tax surcharge plan would actually end the war, or stop it sooner, I might
see this differently. But it seems to me that highlighting budget problems now
would be more likely to affect funding for needed social programs such as food stamps and unemployment compensation than it would be to
affect the war effort.
I'm curious to hear your thoughts on this:
Will the Obey Plan End the War?, by Bruce Bartlett, Commentary, Forbes: In
recent years, Republicans have been characterized by two principal positions:
They like starting wars and don't like paying for them. George W. Bush initiated
two major wars in Iraq and Afghanistan, but adamantly refused to pay for either
of them by cutting non-military spending or raising taxes. Indeed, at his
behest, Congress actually cut taxes and established a massive new entitlement
program, Medicare Part D.
Bush's actions were unprecedented. During every previous major war in American
history, presidents demanded sacrifices from rich and poor alike. As Robert
Hormats explains in his 2007 book, The Price of Liberty: Paying for America's
Wars, "During most of America's wars, parochial desires--such as tax breaks
for favored groups or generous spending for influential constituencies--have
been sacrificed to the greater good. The president and both parties in Congress
have come together … to cut nonessential spending and increase taxes."
During World War II, federal revenues roughly tripled as a share of the gross
domestic product (GDP) and the number of people paying income taxes expanded
tenfold, from 3% of the population in 1939 to 30% by 1943. In 1940, a family of
four needed close to $80,000 of income in today's dollars before it paid any
federal income taxes at all. By the war's end, it saw its effective tax rate
rise from 1.5% to 15.1%. (Today such a family only pays a federal income tax
rate of about 6%.) But taxes weren't the only way the war was paid for. Spending
on nondefense programs was cut almost in half, from 8.1% of GDP in 1940 to 4.4%
Even during wars closer in magnitude to those in which we are presently engaged,
significant sacrifices were made. In 1950 and 1951 Congress increased taxes by
close to 4% of GDP to pay for the Korean War, even though the high World War II
tax rates were still largely in effect. In 1968, a 10% surtax was imposed to pay
for the Vietnam War, which raised revenue by about 1% of GDP. And there was
conscription during both wars, which can be viewed as a kind of tax that was
largely paid by the poor and middle class--young men from wealthy families
largely escaped its effects through college deferments.
However, Bush and his party, which controlled Congress from 2001 to 2006, never
asked for sacrifices from anyone except those in our nation's military and their
families. I think that's because the Republicans understood, implicitly, that
the American people's support for the wars in Iraq and Afghanistan has always
been paper thin. Asking them to sacrifice through higher taxes, domestic
spending cuts or reinstatement of the draft would surely have led to massive
protests akin to those during the Vietnam era or to political defeat in 2004.
George W. Bush knew well that when his father raised taxes in 1990 in part to
pay for the first Gulf War, it played a major role in his 1992 electoral defeat.