- The Washington Times - Friday, November 19, 2010


It is hardly surprising that President Obama’s debt commission released a draft proposal last week that promised little in the way of fiscal prudence, instead increasing the size of government and leaving taxpayers to foot the bill. Like other so-called bipartisan budget deals before it, the plan sells out taxpayers for bigger government. Commission Co-chairmen Alan Simpson and Erskine Bowles released an almost trillion-dollar tax increase to pump up the bloated Pelosi-Obama-Reid spending for years to come. Accepting the bloated base line of fiscal 2010 spending and pretending that rescissions from that amount to “cuts,” they portend raising taxes to an all-time high of 21 percent of gross domestic product (GDP).

This, however, is not the first time taxpayers have been sold tax-raising snake oil with sweet promises of spending reform.

In 1990, President George H.W. Bush joined with House and Senate Democrats to craft a budget that raised taxes, breaking his “Read my lips; no new taxes” pledge. Democrats sold the president a plan that promised $2 in spending cuts for every $1 in tax increases. Not only did the spending cuts never materialize, outlays actually grew. Congressional Democrats instead spent $23 billion above the pre-budget-deal base line. Of course, the tax increases became manifest immediately - resulting in a $137 billion tax increase in exchange for the explosive spending.

Taxpayers didn’t respond kindly to this abuse. In the 1990 congressional midterms, Republicans lost eight seats, while Mr. Bush was shown the door after only one term. Lawmakers would be wise to heed the lessons learned the hard way by those who break tax pledges.

The first President Bush wasn’t the only Republican to buy into the fallacy of a bipartisan budget deal that promises spending cuts in exchange for tax increases. President Reagan signed into law the 1982 Tax Equity and Fiscal Responsibility Act, brokered with Democrats to cut spending and raise taxes. This “deal” promised $3 in spending cuts for every $1 in tax increases.

That spending restraint was never realized, either. Instead, the resulting tax increase was the largest in peacetime history, making up almost 1 percent of GDP. This $37.5 billion tax increase did nothing to shore up the spending deficit - in fact, the deficit jumped from 4 percent of GDP in 1982 to 6 percent in 1983 and did not dip back below 4 percent until after the tax reform enacted in 1986, when it dropped 1.8 percentage points to 3.2 percent in 1987.

This illustrates the misguided notion that tax increases can fix what is - at its core - an overspending problem. The Simpson-Bowles commission has ignored this simple fact, just as the budget-busting deal brokers of the past few decades did. This is not to say, however, that all is lost whenever lawmakers put their heads together to confront an overspending problem.

One commission that has resulted in taxpayer savings is the product of the Defense Base Realignment and Closure Act of 1990, which tasked a commission with closing military bases that were underused in the wake of the Cold War. The BRAC process was able to streamline military spending on underused facilities, enacting real savings for taxpayers. The success of the BRAC process can be found in its simplicity. Had the commission been tasked with opening as well as closing bases, the closures would have been forgotten. Bureaucrats, who have difficulties multitasking, would be too tempted by the political palatability of opening, rather than closing, bases. The same is true for commissions that fixate on the deficit - salivating for an excuse to raise taxes, they always forget spending cuts when government growth is a tangible option.

Congress has not always been so loath to rescind spending. In the wake of explosive New Deal government growth, Sen. Harry Byrd, Virginia Democrat, created the Joint Committee on Reduction of Nonessential Federal Expenditures in 1941. The committee was meant as a balance to the appropriations committee, serving instead as an anti-appropriations committee that only cut spending. The committee, which survived until 1974, enacted real savings for taxpayers, cutting wasteful government programs and streamlining government inefficiencies. All told, the committee was able to render more than $38 billion (in 2010 dollars) in taxpayer savings, eliminating New Deal bulwarks such as the Works Projects Administration.

Just as with the BRAC Commission, the anti-appropriations committee was successful because it was focused - when new spending was taken off the table, true reform and rescissions were made easily. It is difficult to imagine today the Appropriations Committee being able to enact this kind of prudence - the proclivity to spend is simply too tempting. History has shown that politicians cannot resist spending any more than they can resist gravity when tax increases are available to them to fuel the flame of bigger government.

The moral of the story is this: Real plans for fiscal reform cut spending. However, tax increases will always be the excuse for those who lack the will to decrease the size of the state. Simpson-Bowles, which accepts near-unprecedented spending increases as the base line, is another in a long line of fiscal farces meant simply to lend the “bipartisan” label to another excuse to grow government. Even more egregious is the co-chairmen’s attempt to sell taxpayers on this “new normal” -a post-stimulus, post-bailout world in which more than a trillion dollars in overspending each year is acceptable convention. This latest bipartisan budget deal is no different from its predecessors - permanent tax increases always take hold while spending restraint is left by the wayside.

Mattie Corrao is government affairs manager at Americans for Tax Reform.

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