Time to Teach Stockman a Lesson (Again)

by J. D. Foster

The great American wit Will Rogers once said, “I’m not a member of any organized political party, I’m a Democrat.” These days, Republicans might say the same thing.

Political parties are always evolving, or dying. The Republican party is evolving in many ways best left for others to describe, but in the realm of fiscal policy, the two dominant wings that have waxed and waned for decades are once again battling for ascendancy. On one side are the “tax collectors for the welfare state,” as former House speaker Newt Gingrich once called former Senate majority leader Bob Dole. David Stockman, Reagan’s first budget director, recently wrote a piece in the Los Angeles Times reaffirming his place in this tattered wing.

Unlike their tax-hiking cousins in the Democratic party, it’s not that Stockman’s tax-collector wing likes higher taxes. They probably don’t. But they are always ready to put up a fight for show and then do the responsible, bipartisan thing by caving to whatever higher taxes the other side demands. Most of the tax-collector wing lacks Stockman’s courage to state their beliefs, but they can be found out easily enough — they’re the ones who regularly support higher spending, waffle on tax relief, and then mouth support for toothless budget reforms and phony balanced-budget amendments.

Stockman asserts we need to allow the 2001/2003 tax relief to lapse at the end of the year, imposing the largest tax hike in American history by far while the unemployment rate nears 10 percent. He argues the tax relief must lapse because our near-term deficits are unaffordable and the medium- and long-run pictures are worse. Stockman’s assessment of the deficit is entirely correct, but his remedy is, well, consistent with past behavior. Reagan had to take Stockman to the woodshed before firing him because of his tax-collector allegiances.

Government spending has long been too high, rose under Bush, and has soared under Obama. The solution is simple enough — slash the spending. But, in tax-collector world, cutting spending is too difficult and, after all, some of this spending is really, really important. So taxpayers just have to cough it up, but we’re really, really sorry.

On the other side of the party is the taxpayer-protector wing — folks (author included) who say they want to keep taxes and tax rates low, and really mean it. Their foundational belief was captured succinctly by Indiana governor Mitch Daniels: Never take a dollar from a free citizen through the coercion of taxation without a very legitimate purpose.

Contrary to caricatures from inside and outside the Republican party, in championing lower tax rates the taxpayer-protector wing cares little about the rich or corporations. The rich and corporations can take care of themselves very nicely, thank you. The taxpayer-protector wing supports lower tax rates because lower rates permits job growth and higher wages through the unshackled products of rewarded hard work leavened by the American entrepreneurial spirit.

Lower tax rates and a smaller government soared to prominence as a meaningful political doctrine in the modern age with Jack Kemp and Ronald Reagan, lapsed a bit under Bush senior, came to the fore again with Bush junior (despite the excessive spending), and is now looking for a national-level champion. It is the point of view that animates the Republican party and that has gone quiet whenever Republicans lose their way.

In short, within the Republican party there are tax collectors and taxpayer protectors. The former reflect a pale, minority, defeatist world view. The latter, the taxpayer protectors, are literally the life of the party.

J. D. Foster is the Norman B. Ture senior fellow in the economics of fiscal policy at the Heritage Foundation.