Tax and Spend

Posted: Mar 29, 2007 12:01 AM

WASHINGTON -- The new Democratic majority today [Thursday] begins dancing the next phase of the tax-and-spend minuet in the House of Representatives. Following the example of their Senate brethren last Friday, House Democrats will adopt a budget resolution containing the largest tax increase in U.S. history amid massive national inattention.

Nobody's tax payment will increase immediately, but the budget resolutions set a pattern for years ahead. The House version increases non-defense, non-emergency spending by $22.5 billion for the next fiscal year, with such spending rising 2.4 percent in each of the next three years. To pay for these increases, the resolution raises taxes close to $400 billion over five years -- about $100 billion more than what the Senate passed.

It had been assumed the newly majoritarian Democrats in Congress would end President Bush's relief in taxation of capital gains, dividends and estates. What came as a surprise was the simultaneous rollback in Bush-sponsored income tax cuts. This represents Democrats' belief they can politically survive this long-term commitment to bigger government. Here is an audacious effort to raise the banner of fiscal responsibility while increasing spending and taxes.

This Democratic strategy is encapsulated in what Harry Hopkins, President Franklin D. Roosevelt's main man, is alleged to have told a friend at New York's Empire Race Track in August 1938: "We will spend and spend, and tax and tax, and elect and elect." While Hopkins denied ever saying that, those words represented successful Democratic government and political strategy for the next two decades.

John F. Kennedy, reclaiming the White House for the Democrats for the first time in eight years, altered the party's pattern in 1961 with massive tax cuts. However, Bill Clinton, taking power in 1993 after 12 years of Republican rule, returned to the Hopkins formula by proposing and passing what then was the biggest tax increase ever. It was "tax" and "spend," but not "elect." The Clinton tax contributed to the 1994 Democratic loss of control of both houses of Congress for the first time in 40 years.

Why, then, having just regained congressional control, are Democrats going down this dangerous path again? Indeed, while President Clinton in 1993 had to twist arms for a one-vote margin in each house. Democrats now obediently fall in line for tax increases. Their conduct is explained by faith in the March 20-25 Democracy Corps poll that voters associate Democrats more than Republicans with "fiscal responsibility," 44 percent to 36 percent.

The architect of that impression is Sen. Kent Conrad, the austere Democratic chairman of the Senate Budget Committee. "It restores fiscal responsibility by balancing the budget by 2012," he said of his resolution in Senate debate last week.

Conrad claimed: "We try to keep taxes low." In fact, Conrad is the consummate tax collector who spent the 12 formative career years prior to his 1986 election to the Senate as an assistant tax commissioner and then tax commissioner in North Dakota. His most recent liberal ratings are 90 and 85 percent by the liberal Americans for Democratic Action. The National Taxpayers Union put him at 17 and 16 percent in 2005 and 2006.

The breakdown of the bill on the House floor today (resembling the Senate version) raises taxes an average of $1,795 on 115 million taxpayers in 2011. Some 26 million small-business owners would average $3,960 more in taxes. The decreased number of Americans actually subject to income taxes will all be paying higher taxes, and 5 million low-income Americans will be returned to the rolls.

Rep. Paul Ryan of Wisconsin, the 37-year-old fifth-termer who is the House Budget Committee's new ranking Republican, has proposed an alternative resolution. It not only retains Bush tax cuts but also proposes deep reductions in spending, protects Social Security payments and runs down the national debt.

Why was no such budget resolution proposed during 12 years that the GOP was in the majority? Would the party's leadership support the Ryan resolution if it were in control now? That those questions must be asked undermines Republican credibility and explains why Democrats dare return to tax, spend and elect.