Deficit-neutral warmaking

WWII came to end quickly, considering it's vast scope and that was without taxes.

Again war (because we are dealing with necessities here) and funding do not go together. But to be fiscally responsible, linking those two is good too. I think instead of going into History it is worthwhile to explore possibilities right now in today's context.

Commander-in-chief declares a war (even after Congress resolution) or escalates a war. So the natural questions, is he the right person to put forward 'tax increase' proposals? I think so. Congress, by nature, does not serve Truth to Americans and is loath to do anything which is not popular (yes, that is your beloved House there).

So in this case I believe, funding Afghan war via Taxes - that responsibility squarely rests with President Obama what with Congress is not enthusiastic in the first place to undertake this surge. But from time and again, Obama has shown that he misses certain 'crucial' things and this seems one of that.

True, in the conversations with journalists before his speech, he talked about funding this surge at the tune of $30B and he and Orszag very well do that too in the next year's budget. As Megan pointed, may be the amount is small so no concrete tax proposal right now.

But on the other hand precisely because the amount is not too big (by Washington standard); politically it would have been easy to add this tax and Obama missed that. Besides, it is the question of principle and precedent too. Again, a good opportunity missed.

I don't know of any papers on war finance, but its a sensible argument. I can think of a couple good reasons.

A financed war requires an initial tax increase. This is going to reduce its initial popularity, and thus put more pressure on the administration to finish quickly.

That criteria would also serve to cut down on marginal wars, which may be likely to drag out longer because there isn't the political will to commit the number of troops needed to win quickly. We had around 11 million soldiers in WW2. Our commitment to Afghanistan has been around 70K per year, I think.

Of course, the counterargument would be that we tended to finance wars years ago when we were more fiscally austere. Back then, we were fighting states or small isolated groups that were easily identifiable. Even during the Mormon Wars, which would be the closest analogue, the Mormons were effectively isolated.

No person who complains about a war tax for Afghanistan ought to ever again complain about the deficit.

Umech,

WWII was heavily tax-financed. There was definitely borrowing, but taxes were raised significantly to pay for the war.

umesh409 wrote:
"Commander-in-chief declares a war (even after Congress resolution) or escalates a war."

Actually, no. Only Congress can declare a war. Presumably, if this worked the way the Founders intended, wars and funding would "go together" because the same Congress that declares the war is responsbile for funding it. Just another example of how our political system is not working.

Umesh409:

World War II had a load of taxes. In 1940, 10% of employed Americans paid income taxes. By 1944, virtually everyone did. World War II also saw the advent of employer-based withholding. In addition, the top tax rate was 94% imposed on incomes above $200,000 (and lowered slightly from the 100% rate proposed by Roosevelt).

and i'm not sure why barnett says that vietnam was mostly financed through deficits: LBJ, after initially financing it all through deficits pushed through a surtax.

I guess with WWII even increased taxes could not fund the full cost and hence America landed with 20 to 25% of GDP deficit funding for that war.

On second thought, Ezra's attempt to link 'longevity of war and taxes' is even more misguided. You fund war by taxes so that sovereign remains solvent. Fiscal prudence is a solution for economic viability of that nation state and that is part of battle of wits in a way.

However, wars do not get ended because population is tired of taxes or want to end taxes early. Wars get ended because you either win or loose wars in distant places; typically in areas where you do not collect taxes. Again war is a necessity for survival as long as we are not talking Empire building. Even Bush's Iraq II war was not an exercise in empire building (whereas with Soviets in Afghanistan, we can not say so).

Further what happens when population starts pressuring elected politicians to end the war because they no longer want to pay taxes? After Iwo Jima (where I guess Americans lost 7K soldiers and Japanese around 23K) and other Pacific battles; Americans felt the need to conclude WWII quickly which played the role in dropping Little Boy and Far Man on Japanese cities. So will then rulers be tempted for such darconian measures because back home people are not ready to fund a war any more? Scary thoughts.

So I guess it is futile to link longevity of war and fiscal prudence. These things should be treated separately.

Barnett greatly overstates the case. Except for WWII (which was a real emergency) taxes usually don't get raised until wars drag on and are already somewhat unpopular. So it's hard to draw any conclusions from that.

With regard to the current situation, I read that Obama told reporters the tax would limit his flexibility as Commander-in-Chief. Those are the magic words which should shelve this debate for a couple of years at least. I suggest we move on.

One more point - even President Obama also mentioned that he does not want to get subjugated to vicissitudes of Congress every time he needs 'funding' nod from Congress to undertake war escalation. Obama rightly senses the danger of such precedents.

So we understanding war funding can very well lag tactical and strategic decisions regarding a war theater. What we want is 'fiscal prudence' in it's own right.

Because what happens when tomorrow we get natural calamity and epidemic? Say Fed is involved in spending huge sums to deal these things. What do we want? Is fiscal discipline misplaced there?

That is to say, fiscal discipline is like law of gravity - it applies no matter what. War has it's own political dynamics and fiscal solvency of it's own.

Arguably, the US Revolutionary war was such a war.

On the American side, we were building quite a debt up (thanks to the French helping us get access to debt). And pretty often we would just not pay the troops, or pay them in war bonds.

On the British side, they had a much harder time debt financing the war, because they were already in debt from, uh, defending the US in the French and Indian war (and, ok, fighting the 7 years' war in Europe). Ironically, that's what was behind the sugar and stamp and all those other taxes--Parliament had to pay down war debt. And that's what made it hard for England to sustain the Revolutionary war on their end--they just couldn't borrow that much money, and there was little public willingness to pay for a war against the Americans. And their expenses were higher b/c they had to ship over so many of their troops, who also demanded to be paid in real money (Hessians ain't free).

I think when you're forced to pay for a war, you start to see the difference between a war of choice and a war of necessity. Wars of choice get dropped. Wars of necessity get fought.

"If it takes the threat of a tax increase to get people to think seriously about whether it's worth continuing to fight wars far from home -- wars that have only the most tenuous connection to the national interest -- then it's a good idea."

That's the problem with Afghanistan, our presence there has a direct line connection to our national security, much less 'interest'. We're there because the Taliban government provided support and staging for Al Qaeda, who directly attacked the United States on our own soil. Afghanistan would not degrade into a 'failed state' like Somalia, with social anarchy and no resources. There continues to be every indication that the Taliban could reestablish their dominance in Afghanistan within a few years, then we're back at September 12, 2001.

I abhor the military adventurism that seems to have become part of our national culture and our almost global military hegemony. I also believe our failure to do 8 years ago what the Obama Administration is trying to do now, is our collective national responsibility. We kept President Bush and the Republicans in office in 2004. A national tax would simply recognize our collective cost for our national security.

Jaycal, you may not remember this, but as of Sept 12, 2001, the US was willing to let the Taliban stay in power as long as they would hand over Bin Laden and destroy the training camps.

The Taliban are despicable but they are not superhuman and they operate in their own self-interest. It is unlikely that, having once tested our willingness to overthrow them and having then incurred 10 years worth of our wrath, they will in the future take the same risk, for an objective of a diminished Al Qaeda whose objectives are different from those of the Taliban.

If they do resume support for Al Qaeda, we will surely be more vigilant and inclined to take the early action that the Clinton administration was unwilling to pursue.

Bartlett's post is a perfect example of an economist assuming he has smart things to say about subjects he does not understand.

There is no way for any government to control when wars end. To claim the tax policy one government adopts will hasten the end of a war is simply silly.

In theory it could hasten unilateral withdrawal. But there's no evidence that has ever happened. We didn't give up on Korea because some guy in Congress got antsy about taxes. We gave up because it was clear that we couldn't keep the Chinese PLA off of the peninsula without using nukes, doing so would probably cause a war with the Soviets, and that even if the Soviets stayed out we'd lose hordes of troops.

And unilateral withdrawal is something you really don't want to encourage anyway. Just ask Trotsky how well his attempt to declare peace with the Kaiser went.

Especially in Afghanistan. If we did that they'd have extra troops to send to the Pakistani Taliban, which would increase the odds they'd get their hands on nukes, and nuclear Taliban are pretty damn scary.