The Corner

Technicalities

I’ve been debating Jonathan Chait over at The New Republic about whether Bush hatred is justified, or at least rational. Chait had the last word, and I declined to prolong the debate. But I can’t resist making one small point. In the course of our debate we disagreed about whose tax cuts were bigger, the incumbent’s or Ronald Reagan’s. I said Reagan’s were bigger, in support of my point that Bush is not the rampaging right-winger Chait makes him out to be. Chait said that Bill Gale and Peter Orszag of the Brookings Institution had established that Bush’s tax cut was larger than Reagan’s as a share of GDP “if you allow for some technical corrections.”

In response, I noted that I doubted I’d agree with this duo’s technical assumptions—I’ve criticized Orszag’s work before. In his final entry to the debate, Chait explained what the “technical corrections” were. There were two. First, Chait and company exclude 45 percent of Reagan’s tax cut from consideration! That’s some technical correction. Reagan’s tax cut indexed tax brackets for inflation. In the 1970s, people were taxed on the basis of inflationary gains in income even though their real income hadn’t risen. For Chait, the 45 percent of the tax cut that was devoted to ending that practice need not be counted as a tax cut because it “merely offset natural revenue growth from inflation.” Second, the cost of Reagan’s 1981 tax cut should, in Chait’s view, be considered only after taking account of the 1982 tax hike that partly undid it.

I think that the second “correction” is illegitimate given the context in which I brought up this issue. (Chait had said that Reagan was more moderate than Bush insofar as Reagan had partly undid his tax cut. I acknowledged Reagan’s zigzag, but said that his initial tax cut was much larger than Bush’s. Chait’s technical correction essentially concedes rather than refutes my point.) But my real argument is with Chait’s first correction.

The size of Reagan’s tax cut should be measured by what taxes would have been without his bill, compared to what they were with his bill. Excluding half of the tax cut is unfair. I have advocated a strengthening of indexing. The tax brackets should go up most years to reflect both inflation and real income growth. Otherwise average tax rates climb automatically. If my bill were to become law, projected revenues over the next decade would drop by (roughly) a kazillion dollars. I would of course be able to say that the tax cut “merely offset natural revenue growth” and was thus not a tax cut at all. But somehow I doubt that Chait would buy that argument.

Chait has the nerve to say that I’ve been “acting as Bush’s defense lawyer.” It’s better than being a crooked DA.

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

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