by Linda Beale
Let the Wars Start–only when we are willing to pay for them
The op-ed page of the New York Times often has some thoughtful items worth reading. Russell Rumbaugh’s A Tax to Pay for War, New York Times (Feb. 11, 2013), at A17 is one of them. As Rumbaugh notes, the slight delcine in military spending since 2009 has provided some breathing room on solving the fiscal crisis, but that breathing room could quickly vanish if we undertake new military interventions. As he notes:
[W]ar spending–like all government spending–wrecks public finances only when more money is spent than is brought in. …Three years ago, the Senate Budget Committee adopted a bipartisan amendment requirement that wars be paid for. …[But] none of these proposals resolved the question of whether to pay for future wars through spending cuts or raising more revenue.”
Rumbaugh urges that we “make a choice and require a tax surcharge to pay for any military operation.”
He offers three primary rationales for instituting a war surcharge:
1) Historic norms and traditions for financing wars: we have historically made major changes in tax poli:y in connection with undertaking wars, from the development of the income tax initially in the Civil War to its permanent inclusion in the US Code during WW I to the use of withholding in WWII and the enactment of a tax surcharge during Vietnam to pay for that war.
2) Ease of implementation: The “savings” from leaving Afghanistan coupled with the passage of the Budget Control Act with a cap on military spending offer a similar opportunity for a war surcharge. Any “necessary” military spending above the cap would result in an automatic surcharge to raise the necessary revenues.
3) Proper consideration of the costs and benefits of war: Rumbaugh notes that a surcharge will mean that argumnents for military action “would explicitly include a call for increased taxes, forcing the question of whether the stakes in the military situation are worth the cost. If the American people agree they are worth it, the president will get both the political support and [the] financing he needs.” After all, “[i]f military action is worth our troops’ blood, it should be worth our treasure, too.”
These arguments seem sound. Certainly one factor in causing the Great Recession we are still coming out of was the decision to go to war in Afghanistan and Iraq–wars likely to be long and costly in terms of technical equipment as well as lives and costs of caring for wounded soldiers (physically and psychically) afterwards–and just put it on the credit card by LOWERING taxes at the same time for the very wealthy amongst us in particular. Whereas tax rates in war have been very high in the past, the Bush wars of choice were fought with borrowed money. And perhaps those wars were more easily entered into because there was no direct cost obvious to Americans at the outset.
The use of a volunteer armed force left most of us more removed from the conflict; the use of “embedded” journalists who did not have the opportunity to capture iconic images of the war outside the scope of what the Pentagon wanted to be seen left most of us with uncertainty about what was really going on in the war zones; and the use of borrowed money to fund the wars meant Americans could go about their daily lives with little recognition that we were a country engaged in a very costly military battle.
PS. I would note that government spending even when it is based on borrowing doesn’t necessarily “wreck” the economy as he implies–Krugman, Stiglitz and other economists will tell you that it is much better to borrow and spend after a recession than to adopt silly austerity measures. When the private sector isn’t spending, government needs to. But we should spend wisely–infrastructure spending, for example, might make a lot more sense than military intervention spending, as Blodget suggests in the post linked below. Even wiser–tax ourselves to pay for whatever wars we decide to fight. The war tax is a win-win Tobin tax–if we go to war, at least we have the revenues to pay for the war. If the potential tax take discourages us from going to war, then we have less war, which I suspect most of us would think is a pretty good outcome……
cross posted with ataxingmatter