Are conservatives beginning to admit the need for new taxes?
Kevin Hassett's review of Bruce Bartlett's new book critiquing the relevance of supply-side economics is an extraordinary document. The review appears in the National Review, and Hassett is a well-known conservative economist. Somewhat predictably, his review starts out straining to attack Bartlett. After quickly recapping Bartlett's journey as a harsh conservative critic of George W. Bush, Hassett puts him swiftly in place. "There is perhaps no man so praiseworthy in 'elite' circles as the prodigal conservative who has 'seen the light,' " writes Hassett, leaning heavily on scare quotes. "Bartlett has been practically blinded by it, and has, accordingly, become a media darling." Oh, snap!
But Hassett's effort at a takedown crashes quickly on the shoals of Bartlett's actual argument, which Hassett finds himself unable to reject quite so flippantly:
The problem is that the supply-side formula requires lower taxes and smaller government. You cannot, Bartlett correctly argues, have one without the other. In the U.S., government spending has advanced steadily under both Democratic and Republican administrations. The difference between Republicans and Democrats appears to be that Republicans, who oppose higher taxes in almost every form, pursue policies that end up being unsustainable.
As bad as it is today, when one looks ahead to an America that shortly will have the same age distribution that Florida has now, one can only conclude that it is going to get much worse. The health bills of our senior citizens alone may well exceed the current size of government in a few decades. Bartlett starts a difficult conversation. If we cannot constrain the growth of government, are we going to try to run a Ponzi scheme, or are we going to pay for it? If we choose the latter, how are we going to raise the money? Bartlett's answers are well researched, drawing on a massive literature.
On this, Hassett and I agree. And I'll take the opportunity to say Democrats have been little better than Republicans. President Obama's most damaging campaign promise was his inane pledge to preserve tax rates on people making under $250,000 a year. His attacks on John McCain's effort to tax health-care benefits limited his options when he became president and realized that that was exactly what needed to be done, leaving Democrats proposing a roundabout excise tax on expensive insurance plans, which is, at base, a less progressive policy. (Taxing health benefits allows the tax to vary with the worker's income, while the excise tax is a flat rate.)
Put it all together and America is in a much harder situation than it was in the early-90s, when George H.W. Bush raised taxes to help cut the deficit, and Bill Clinton quickly followed his lead. The tax conversation wasn't free of demagoguery then, but assorted grown-ups were at least willing to ignore it. Not so now.
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