Republican legislators accept the need for tax increases, but want to boost "sin" taxes (on cigarettes and alcohol). When a political ally privately asked Daniels why he was going the tax-the-rich route, he replied that Democrats could not now accuse him of balancing the budget on the backs of the poor. That amounts to avoiding criticism from the left by imitating it, a tactic used by the GOP in the past with calamitous results.
Daniels this week described himself to me as an "in-the-blood supply-sider." I called Jude Wanniski, a founding father of the supply-side movement, to see whether he still claimed Daniels. He did, noting that Reagan as governor of California raised taxes from time to time. Like Daniels, Wanniski would prefer a temporary surtax to permanent nuisance taxes.
But many other Republican leaders oppose any tax increase of any kind at any time, for one reason. It was stated for me this week by Mississippi Gov. Haley Barbour, who was deputy to Daniels in the Reagan White House. "Raising taxes," said Barbour, "is the enemy of controlled spending." More revenue inevitably generates more government. Accordingly, Barbour has fought all tax hikes and intends to veto an increased tax on cigarettes if it passes the Legislature.
Daniels might well take Barbour's example to heart as more relevant than the four-to-one Hoosier support for taxing the rich shown by his polls. With such backing at home, Daniels is contemptuous of criticism from Grover Norquist's Americans for Tax Reform and The Wall Street Journal. "If I told you how little I care," he told me, "it would be hard to exaggerate." But the OMB director who faced down congressional big spenders might consider Haley Barbour's theory of how taxes impact spending.