Politics & Policy

Cut Defense Before Raising Taxes

The supercommittee backs budget hawks into an uncomfortable corner.

Lost amid all the hoopla last week about President Obama’s latest stimulus bill and the Republican primary dustup over whether Social Security is a Ponzi scheme was the news that the bipartisan “supercommittee” has begun its work trying to find at least $1.5 trillion in deficit reduction. Anyone who cares about low taxes, limited government, and economic growth should be paying close attention.

That’s because the initial signs are not encouraging.

The supercommittee is, of course, the bastard child of this summer’s deal to raise the debt ceiling. Equally divided between senators and congressmen, Democrats and Republicans, the supercommittee is supposed to come up with a plan to reduce spending or increase taxes in order to reduce our national debt.

Democrats are pushing for tax hikes. A leaked memo from supercommittee documents includes proposals for a 5.4 percent surtax on families earning $1 million or more, an increase in the estate tax, and the usual hodgepodge of taxes on oil companies, hedge-fund managers, corporate-jet owners, and others who have drawn the Democrats’ ire.

It takes just seven votes to send the committee’s recommendations to the floor, so if just one of the Republicans jumps ship, then the Democrats’ tax hike will head to the House and Senate, where it will receive a vote under expedited procedures. And there is considerable reason to worry about whether Republicans are prepared to hold firm.

So far, Republicans have been bending over backwards to insist that all ideas are on the table. “I don’t want to rule anything in or out,” says Rep. David Camp (R., Mich.), who in addition to being a supercommittee member is chairman of the House Ways and Means Committee. Supercommittee member Rep. Fred Upton (R., Mich.) has said that he will join Democrats in opposing any effort to cut entitlements, including raising the retirement age for Medicare or Social Security. Upton says that, while he leans against raising tax rates, he is open to “closing loopholes.” Other Republicans have shown an interest in reviving the so-called grand bargain reportedly pursued by President Obama and Speaker Boehner. That deal, which would go well beyond the supercommittee’s $1.5 trillion in targeted cuts, included some $800 billion in higher taxes.

The Republican muddle is compounded by the fact that, if the supercommittee fails to reach an agreement, there will be automatic cuts of about $1.2 trillion over the next ten years, roughly $564 billion of which will come from defense, homeland security, and the State Department. Last week, Rep. Howard McKeon (R., Calif.), chairman of the House Armed Services Committee, told the Daily Beast that he would support a tax increase rather than accept any further cuts in defense spending. McKeon is not a supercommittee member, but his remarks reflect the pressure from Republican hawks and defense contractors now being brought to bear.

This position seems remarkably shortsighted. First, the sequester would not go into effect until 2013, leaving Republicans with plenty of time to change the mix of domestic and defense cuts after the 2012 elections. But even if the cuts were to occur, they amount to just a bit more than 8 percent of expected defense spending over the next decade. With the U.S. spending more on its military than the rest of the world combined, does anyone really believe that if we stop protecting Germany from a Russian invasion, cancel weapon systems that don’t work, or reduce the number of generals and admirals populating the Pentagon, that al-Qaeda will come swarming across our border?

On the other hand, if we fail to revive our economy, that really does represent a threat to our national security. And the massive tax hikes envisioned by supercommittee Democrats would be devastating for future economic growth. Republicans are facing a difficult choice. If we are ever to seriously cut the deficit and reduce our crushing national debt, 20 percent of the federal budget cannot be permanently kept off the table. After all, a poorer America is not a more secure America.

With the supercommittee’s November 23 deadline just two months away, Republicans had better figure out what their position is. Otherwise, we should get ready for higher taxes.

— Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Michael TannerMr. Tanner is the director of the Cato Institute’s Project on Poverty and Inequality in California and the author of The Inclusive Economy: How to Bring Wealth to America’s Poor.


The Latest