As Politicians Waffle, Debate Will Be Taxing

9 January 2002

The president has taken to saying peculiar things again. "There are no shades of gray in our war on terrorism," he announced the other day. Excuse me, but if you've ever seen anything grayer than some of our warlord allies in the Northern Alliance, please write at once.

I especially like the reports that the warlords are now calling in American air strikes on one another. "A City, Free of Taliban, Returns to the Thieves," reports The New York Times. "Jalalabad, a city in the hands of thugs and crooks." I'd say that's grayish.

"Not over my dead body will they raise your taxes," announced the president. Well, we know what he meant. According to bipartisan budget experts, we're back in deficit for at least the next several years. That didn't take them long, did it? Nobody is proposing raising taxes, but some fiscally prudent voices have been raised on behalf of postponing some of the generous tax cuts the Republicans gave to the rich in April. You may think Americans are smart enough to tell the difference between raising taxes and postponing tax cuts, but apparently Republicans don't. You can already see what a great political debate this is going to be.

This has an eerie familiarity to Texans, where Bush pushed through not one but two tax cuts that left the cupboard so bare, the state is now stuck with some hideous choices. With an estimated $5-billion deficit, Texas will probably have to follow the lead of Gov. Jeb Bush in Florida and cut funding for the schools. Jeb Bush just signed a bill there slashing $600 million from education.

One of the most ridiculous myths about government is that politicians just love to raise taxes and are always looking for ways to do so. Pols consider raising taxes certain death, and they are often right. The last time the feds raised taxes in 1993, in the face of deficits the size of the Grand Canyon and a $2-trillion debt, the Democrats got it through by one vote in the House and Al Gore voting in the Senate. They promptly lost at the next election, bringing us all the joys of Newt Gingrich, Tom Delay, Trent Lott & Co. Poor Big George Bush, who had done yeoperson service by agreeing to raise taxes in 1990, also paid with his political life, you recall.

Nobody ever has liked taxes and nobody ever will like taxes, but nobody hates raising taxes worse than a politician. It is so notoriously difficult that the late Rep. Jumbo Ben Atwell has carved on his stone in the Texas State Cemetery, "He passed a tax bill." That's why stupid tax cuts are so infuriating (almost as infuriating as stupid spending). For Bush to come back now and trumpet his "economic stimulus" package is pushing folly beyond permission. The package was so bad, it has been widely reported that when they ran it by focus groups, people refused to believe the accurate description of what was actually in it.

The good news is, they are changing the name of the bill! They've put the word "security" in the title! Now instead of economic stimulus, it's the "economic security" bill. This is such an improvement. Also, the former Bush energy plan is now the "energy security bill." Since the normal danger when discussing public issues is oversimplifying them, I suggest only warily that this debate may be simpler than it looks.

The Republican theory of ec-stim is that we should cut taxes, especially for rich people and big corporations. This, the theory goes, will inspire them to invest their new loot in job-creating enterprises, thus ginning up the economy. The Democrats tend to favor public spending, especially focused on those who have lost their jobs, on the theory that these folks are so hard-up, they'll rush out and spend it on new shoes for the baby, this driving up demand and stimulating the economy to produce more again. Some judicious souls believe in a mixture of both.

The trouble with the Republican theory is there's absolutely no guarantee tax cuts will be put into increased production, and thus job creation, and considerable evidence that it won't be. The rich can sit on their money — they don't have to spend it. Corporations have no reason to increase production when there is no increase in demand, plus they can use the money in other ways, for leveraged buy-outs or buying back their own stock or whatever they'd like to do with lots of money. The Democrats' theory is more direct and, depending on which economist you listen to, works better. (The economists had their national convention last week and once again, laid end to end, couldn't reach a conclusion.)

And even simpler way to look at this is as a debate between demand-siders and supply-siders. As some of you will recall from the Reagan era, supply-side economics didn't work out real well. That Laffer curve turned out to be a steep one down. So the question is: How long is a national memory?

Molly Ivins.
Published in the Boulder Daily Camera.
(c) 2002 The Daily Camera.

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