Taxing rhetoric

To the surprise of many Americans, George W. Bush delivered an elegant inaugural address on January 20. In calling for civility, courage, compassion, and character, he spoke to the desire of many for greater national comity and citizen accountability. President Bush insisted that we take our responsibilities seriously both in this country and in the world, reminding us that "compassion is the work of a nation, not just a government." He urged that we think of ourselves as "citizens, not spectators." There was much to applaud in Bush’s brief address, though to his credit, the president did not play his lines for easy applause.

Yet, as carefully crafted as the speech was in its appeal for the nation "to seek a common good beyond your comfort, to defend needed reforms against easy attacks, to serve your nation, beginning with your neighbor," it also exposed the contradictions embedded in the Republican agenda-contradictions that belie the president’s appeal to the common good.

Take the promised tax cuts: the first and almost only extended round of applause during Bush’s speech went to the reiteration of his campaign promise to cut taxes. In a time of budget surpluses, it is an offer that few will resist. Yet everything that the Bush administration hopes to accomplish, from education reform to modernizing the military to providing Medicare prescription coverage, may depend on marshaling resources that lie in those surpluses, to say nothing of all that needs doing and currently goes unattended.

Paul O’Neill, secretary of the treasury, acknowledged at his confirmation hearings the high priority a tax cut has in the new administration. Indeed, the promised cut of $1.6 trillion was the first order of business in the Senate the Monday after inauguration day. And Alan Greenspan’s mixed blessing a few days later (cut, but not too much; the deficit could reemerge if surpluses fail to materialize) was taken by Republicans as an order to move full speed ahead. Many of the details for cuts are still to be worked out and they may prove to be more prudent and equitable than they sounded during the campaign. Absent the particulars, examine and consider the justifications for the cuts frequently repeated by Bush and Company: "The surplus belongs to the taxpayer, not to the government. Taxpayers know better than the government how to spend their money."

But do we?

As many economists have pointed out, there appears to be little economic justification for tax cuts that will kick in after the current slowdown has ended. In the immediate future, the Federal Reserve’s lowering of interest rates is likely to work more smoothly and more quickly. Furthermore, down the line the cuts could turn out to be inflationary, bringing back the huge deficit that the Clinton administration inherited from the last Republican interregnum and finally tamed with the discipline supplied by the aforementioned Alan Greenspan. Reducing the federal deficit used to be a Republican mantra.

Instead, Bush instinctively appeals to a hardy American prejudice: taxation is a form of confiscation. When the metaphor is theft, tax cuts are taken as a form of restitution. That bias leads directly to another: the government that governs least governs best (except for military spending). On those maxims, Ronald Reagan leveraged the country during the 1980s into its biggest deficit ever. Where is the common good, or the common sense, in this?

There are some activities and responsibilities that only a national government can assume; when it fails to assume them, the needs simply go unmet. Chronic funding shortages at the State Department hobble our ability to conduct foreign policy. Minimal support of international bodies and foreign aid is stingy, counterproductive, and unjust. Airline safety, a secure food supply, drug testing and regulation-to name only a few of the most basic government responsibilities-all show the continuing effects of the cutbacks imposed during the Reagan administration. Certainly there is no point or virtue in defending bloated government bureaucracies, but when government officials lack the personnel and resources to carry out and supply the most basic "common goods," it is the citizenry itself that ultimately pays the price. (Note: we do not even mention the potential need for increased welfare and unemployment funds, and increased health-care spending, should the economy sink.)

In fact, taxpayers don’t always know better how to spend their money, because they often can’t see the larger picture or focus on what needs to be done. The tax cuts Bush proposes are very likely to be plowed into consumer goods when that money is actually needed "to seek a common good beyond your comfort."

Bush should listen more carefully to his own inaugural address. In another elegant sentence, he urged Americans to "show courage in a time of blessing, by confronting problems instead of passing them on to future generations." Exactly.

One of the first tasks of the new administration should be to conjoin its rhetoric with reality.

Published in the 2001-02-09 issue: 
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