WASHINGTON -- "The only Grover they know in Indiana is the fuzzy creature on Sesame Street," cracked Indiana Gov. Mitch Daniels after anti-tax activist Grover Norquist attacked his proposed tax increase. That reminded Norquist of the 2003 remark by Ohio Gov. Bob Taft: "The only Grover I know is on Sesame Street." Norquist retorted: "Not only do these tax-hikers have the same tax policy, they also have the same gag writers."
Until Jan. 18, nobody dreamed of comparing Bob Taft to Mitch Daniels. The Ohioan with the famous Republican name is despised in his own party as a tax increaser. In contrast, as President George W. Bush's Office of Management and Budget (OMB) director, Daniels was a tax-cutting supply-side advocate. But in his State of the State address Jan. 18, the newly inaugurated Daniels stunned Hoosiers by proposing a one-year increase in Indiana state income taxes from 3.4 percent to 4.4 percent for people making $100,000 or more a year.
It is difficult to exaggerate the surprise in Washington at Daniels's apostasy, linking him with Taft. If this veteran political hand takes the tax increase route out of his budgetary problems, does that suggest Republicans are toying with abandoning their stand against any federal tax hike -- party doctrine ever since the senior George Bush's politically disastrous 1991 increase? They are forgetting that higher taxes inevitably mean more, not less, spending.
A long list of conservative Republicans have entered governors' offices to confront numbers showing massive budget deficits and uncontrolled spending. Claiming there was no alternative, several reluctantly raised taxes. In addition to Taft in Ohio, this course was taken by such supposedly solid conservatives as Bob Riley in Alabama, Mike Huckabee in Arkansas and Don Sundquist in Tennessee.
Other Republican governors, led by Florida's Jeb Bush, have fought off increases -- and even cut taxes -- by wielding a sharp budget knife. That was expected from Daniels, a former White House political director (under Ronald Reagan) who was a star in the first two years of George W. Bush's administration as an intrepid advocate of reduced spending.
In Indianapolis as in Washington, Daniels has antagonized the spending lobbies. After 16 years of Democratic governors and recent Democratic control of the legislature, the education unions and other pressure groups are outraged by his reductions. Even so, Daniels fell 20 percent short of balancing the budget this year. The result was the temporary surtax.
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