A Dem Plot to Raise Taxes
The real budget story.

Mr. Moore is president of the Club for Growth
August 30, 2001 9:00 a.m.

arlier this week, Sen. Kent Conrad, the left-wing senator from North Dakota, said that if the surpluses continue to disappear, we may have to start looking at “revenue options.” Well, there they go again. “Revenue options” is one of those lovely Washington euphemisms for “tax increase.”

Question: What kind of an economic illiterate would call for a tax increase just as the economy is tanking? This is about as sane as lighting a blowtorch in a munitions factory. And folks, this is the man that the Democrats have chosen to run the Senate Budget Committee. Even most left-wing economists would denounce a tax hike as ludicrous given the precarious nature of the nation’s finances.

Though not all. In the August 28th Washington Post, Bob Kutner provides another dose of boneheaded advice to deal with the shrinking surplus: First, repeal the Bush tax cut to regain the lost surplus, he says, then increase government spending as much as possible to pump up growth. This is a demented bit of logic we have here. Kutner says that giving people like you and me a tax cut so they can we spend it on what we want to is economically depressing, but letting Hillary Clinton and Robert C. Byrd spend those same dollars on government programs is a wise investment in the future and an economic stimulus to boot. Of course, if Kutner’s prescription were right, the economy would be soaring and the Dow Jones would be surging into the 20,000 territory. Federal spending this year is already sprinting along at a nearly 10 percent growth pace.

This rush by Democrats to raise taxes is the first good news that Republicans have had in weeks. As the economy slows, Democrats are so thirsting for more revenues that they’re now publicly endorsing tax hikes. Since, the Bush tax plan is now the law of the land, repealing it would require raising taxes on at least 75 million people. By all means, let them run in 2002 on that message populist message.

The Democrats are also fiscal hypocrites when it comes to the tax issue. The Capitol Hill newspaper The Hill reported last week that the vast majority of the Democrats who opposed the Bush tax cut are intending to cash their rebate checks rather than send it back to the Treasury. One congressman was quoted as saying: “I have bills to pay.” I only wish he could feel my pain.

The tax rebate, which has caused the surplus to shrink by $40 billion this year, was originally the Democrats’ own idea. In fact, when the White House sent out letters reminding voters that the tax-rebate checks were thanks to George W. Bush’s commitment to tax relief, Democrats howled to high heaven in protest, charging Bush with hogging all the credit. Tom Daschle originally wanted to widen the tax rebate to 35 million Americans who don’t even pay taxes. Now he and his colleagues are threatening to cancel the tax cut that they still say they wanted to go to more people.

The Democrats' fuzzy tax logic goes further back than that. During the presidential campaign Al Gore and the Left’s spin machine complained that the Bush tax cut would “overheat” the economy. Then when it became clear earlier this year that the economy was on rocky ground, an army of left-wing economists said the slowdown would be over before any tax relief could possibly arrive. There is always an excuse with these folks not to cut taxes. Then in the first months of this year Dick Gephardt thrashed the White House for “talking down the economy” to build support for the tax cut. Now, with the economy and the stock market reeling worse than ever, logically they should be in favor of an even larger tax cut rather than repealing the meager one we just got.

Nothing would better aid Republicans in regaining their political balance than a clash over whether taxes should be raised or lowered. Now that the Democrats have staked out their position, Republicans need to counter with an entirely alternative vision: one that includes a big plate of growth enhancing tax cuts. The shrinking surplus is a result of slow growth. Slow growth is a result of a tax anchor on businesses and workers that still hasn’t been lifted. Liberate the economy from that burden and the economy will rise back to life and the surplus will again surge. Mitch Daniels is the one (and perhaps only) administration top dog who has this story right: The surplus is a consequence of economic growth, not the cause of growth.

There’s one problem. Republicans have not articulated a comprehensive economic recovery tax plan containing capital-gains relief, genuine death-tax repeal, and business tax incentives to encourage capital investment and hiring. There is nothing to counteract the Daschle-Gephardt agenda of higher taxes and fattened government. The Democrats have an economically debilitating game plan to resurrect the economy. But at least they have a plan.