Mark Pryor is well on his way to establishing himself as the eminent fiscally conservative Southern Democrat, a role left vacant when Sen. John Breaux retired two years ago. Like fellow-Arkansan Bill Clinton — who may have come to the presidency governing on the left, but moved firmly into the dynamic fiscal center — Sen. Pryor has been shifting rightward on key economic issues. The clearest indication of this came when he voted to postpone for two years scheduled tax hikes on investors and middle-class families. But Pryor has also taken a fiscally conservative position on the death tax, saying he supports “the permanent repeal of an estate tax that harms small businesses and family farms.”
Pryor will have a chance to make good on this promise this week, a point at which true fiscal conservatives in Congress will know for sure if he is a reliable ally.
The way the parties currently are aligned in Washington, the Republican majority supports lower taxes but all too often props up higher spending, while Democrats are splintered on spending questions but largely united in favor of higher taxes. In this environment there is a vital need for a re-emergence of true limited-government principles — those that uphold smaller government both on the spending and taxing sides.
Pryor has always had a fairly limited-government record on spending issues. He voted to reinstate pay-as-you-go rules that would require Congress to offset new spending programs with cuts elsewhere. He has opposed bloated budgets. But the senator’s recent vote on tax reconciliation represented a big pro-growth step. The 2003 tax bill, which reduced the tax rate on investment income, was a stunning success, sharply ending a nine-quarter decline in business investment and igniting a three-year boom. In this time, the economy has grown at a brisk 4 percent rate, creating more than 5 million jobs and the largest labor force in American history; unemployment has fallen from 6.2 percent to 4.6 percent; and federal tax revenues have climbed.
Such a compelling success story should have been enough to convince all members of the U.S. Senate to vote to postpone tax hikes that would undo this economic progress. Yet only three senators who voted against the 2003 tax cuts changed their votes this year in light of this overwhelming evidence: John McCain, Bill Nelson, and Mark Pryor.
And now comes another major test for Pryor. This week the Senate will vote on ending the federal estate tax. Several procedural votes are expected, which will require 60 votes for repeal to succeed. Every vote, in other words, is critical. In the past, Pryor has voted to keep the estate tax, but there are strong indications that, putting fairness and economic growth over partisanship, he may have indeed changed his position.
The estate tax is economically and fiscally destructive. It destroys as many as 250,000 jobs every year. It diverts about $20 billion annually away from businesses and toward expensive life insurance policies and estate planning. This outright destroys family farms and businesses that lack the cash flow or sophistication for such planning. The tax, meanwhile, raises only about 1 percent of federal revenue, and many credible estimates, including a recent one from the Joint Economic Committee, show that repealing the tax would pay for itself through dynamic growth effects and increased capital-gains revenues.
If Mark Pryor is serious about defining himself as a true fiscal conservative he will stay true to his pledge — on all votes, procedural and substantive — to help end the estate tax.
– Phil Kerpen is policy director for the Free Enterprise Fund.