If we must have tax increases, the VAT would not be one of my choices, for the reason Summers predicts – I fear it will generate so much revenue as to accelerate government spending. I’d look instead at Irwin Stelzer’s idea of a tax on oil and natural gas. I’d also want to consider taxing employer-provided health insurance as income: not only would such a tax be highly progressive, but it would also advance the important policy goal of severing health insurance from employment. Bartlett’s idea at least has the great merit of forcing conservatives to recognize that President Bush’s tax-cutting achievements have been rendered unstable by over-spending — and that the GOP’s failure to act on spending today threatens to guarantee tax increases in the future. I agree with Ross Douthat and Reihan Salam about the importance of addressing the social problems that drive the growth of government … But the health care problem is not beyond the reach of sensible policy — which is why by the way I think Gov. Romney’s Massachusetts health care reforms deserve conservative support.
First of all, let me suggest that I’m closer to Frum than to Bartlett on which taxes should be raised. And I’m elated that he is coming around to our position on health care reforms – especially since he worked for a White House that opposed our positions and even took steps to make health care even more inefficient and costly. But he still argues that tax cutters (ah, I meant tax deferrers) like Ronald Reagan and George W. Bush do better in limiting government spending than fiscally responsible leaders like Bill Clinton. Never mind the evidence says otherwise.
Social spending and regulation (for education, anti-poverty programs, health care, the environment) have consistently expanded. In 1954 defense accounted for 69.5 percent of federal spending and “human resources” (programs such as Social Security, Medicare, job training and food stamps) only 18.5 percent. In 2005 defense was 20 percent and human resources 64.2 percent.
Sulli suggests that the military-industrial complex has been replaced by the “senior-entitlement complex”. Measuring expenditure items as percentages of the Federal budget can produce some shock statistics, but it strikes me as an odd way to evaluate this issue. My preference would be to look at these items as percentages of GDP over time – and yes, defense spending as a share of GDP is less today than it was during the Cold War. I guess Robert “not Paul” Samuelson agrees with Sulli that the government should turn back the clock fifty years on the War on Poverty and providing a defined benefits retirement system. Sorry fellows – but I beg to differ.
Update II: Three Republican Senators voted against that INCREASE in FUTURE TAXES –Olympia J. Snowe, Lincoln Chafee, and George Voinovich. While I applaud them, John Miller does not. I guess the folks at the National Review have no clue what Kash was trying to tell everyone. Thank goodness that 3 Republican Senators get the simple point and had there been 48 Democrats in the Senate to vote against this irresponsibility, it would not have passed.
Final Update: I was wrong – CNN lets us know there were 3 pandering Democrats in the Senate:
Democrats Ben Nelson of Nebraska, Bill Nelson of Florida and Mark Pryor of Arkansas voted in favor. Republican Gordon Smith of Oregon originally registered a “nay” vote but changed to “aye” just before the tally was announced. Republicans said to fail to extend the tax cuts would amount to a tax increase on investors, big and small, as well as on families facing the alternative minimum tax. They’ve dubbed the bill the “Tax Increase Prevention Act.” “Are we going to increase taxes on well over 100 million people … or are we going to keep takes low?” said Majority Leader Bill Frist, R-Tennessee. Appearing with Frist and other GOP senators, Treasury Secretary John Snow said, “This is a defining day. A vote today will tell the American people who supports lower taxes and who doesn’t.”
Our Treas. Sec. should be named Jack the Hack.