A revealing thing has happened on the way to the fiscal cliff: A bloc of GOP House members rejected their own leader’s proposal to extend the Bush tax cuts for all but millionaires. Speaker John Boehner expected opposition from Democrats. Instead, he was thwarted by the intransigence of his own members, whose aversion to taxes trumps all other concerns.
Of course, Republicans purport to care about more than low taxes. They say they want smaller government and lower deficits. And yet, they have repeatedly refused to consider trading even small tax increases for much larger spending cuts.
Realistic pragmatists within the GOP caucus (who are presumably deep undercover) must understand that the appropriate level of taxation is not a number that can be picked out of a hat. It should reflect a comparison of the benefits of government spending — be it on national security, social insurance, highways, fire departments, or national parks — with the cost of taxes.
After all, public attitudes toward taxes depend critically on whether people are thinking about that cost-benefit calculus or not. About one-half of Americans say that their taxes are too high, according to a 2011 Gallup poll, while only 4 percent say their taxes are too low. But at the same time, a majority opposes cuts in the biggest federal programs. More than six in 10 don’t want to see cuts in Social Security, Medicare, education, or defense.
Spending without taxing does not equate to free services, of course. As the old oil filter commercial warned, “You can pay me now — or you can pay me later.” Current spending means taxes, either now or in the future, with interest.
The public may be confused on this score when the federal government continually borrows money to pay for current spending. When it does, the immediate, visible signal of the cost of government — taxes due — understates the true cost of government spending. Although people say they want lower taxes, they are already getting more government than they pay for.
To determine the true value voters put on government, pollsters and policy-makers should always ask exactly what government services should be axed or slimmed down in order to lower taxes.
Although people say they want lower taxes, they are already getting more government than they pay for.
Conservatives have sometimes tried to escape those tough choices, or to justify tax cuts, by embracing theories that haven’t panned out in the real world. One is that lower taxes unleash a surge in economic growth that ultimately makes the deficits go away. George H.W. Bush memorably termed this idea “voodoo economics,” and he was right. There’s no evidence that tax cuts pay for themselves.
Another is the “starve the beast” theory — the notion that cutting taxes eliminates the food supply for big, voracious government. If we cut taxes, this theory goes, spending cuts will have to follow. The second President Bush put this idea to the test, enacting the big tax cuts that Congress is now debating renewing. But instead of slowing, government outlays surged, even before the financial-market meltdown and ensuing recession prompted massive short-term spending increases.
Apparently, taxpayers favor big new programs like the Medicare prescription drug benefit even more if it seems that they don’t have to pay anything extra for them. Starve the beast, then, is more of a fairy tale than the Sugar Plum Fairy or Santa Claus, and way more damaging to our children.
The GOP says voters want smaller government and lower taxes. But if conservatives genuinely believe they are in sync with public sentiment, they should be forthright about spelling out the specific program cuts their vision will require.
And if it turns out the public rejects those cuts? Then Republicans should put their tax phobia aside and engage with Democrats on the best way to pay for the services voters want.