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January 16, 2007, 6:06 pm
Good Reasons to Leave Iraq
Foreign policy isn’t my specialty, but before the Iraq war began I wrote a column cautiously endorsing it on the basis of what I knew at that time. There was no pressure on me to say anything on the subject, and I could easily have waited to see how the war turned out before offering an opinion. But that seemed cowardly. Given the importance of the issue, I felt that all opinion leaders had a responsibility to state their views beforehand and not pretend to have always been on the side that history eventually endorses.
I was strongly influenced by reports of weapons of mass destruction that later turned out to be false. Although I was in no position to evaluate the validity of these reports, there were many experts who deemed them credible. Furthermore, Saddam Hussein’s actions in denying United Nations inspectors access to potential locations for W.M.D.’s strongly supported the existence of such weapons.
I finally concluded that if your mortal enemy is pointing a gun at you, you are not obliged to check to make sure that the gun is loaded before defending yourself. It was on this basis that I thought the war just barely passed the threshold of legitimacy. This doesn’t mean I would have gone to war if the decision had been mine, only that I was willing to give President Bush the benefit of a doubt.
By August 2003, I warned that the Iraq invasion was looking more like a war for empire than self-defense. I finally denounced the war in an April 2004 column and expressed dismay that the administration’s justification for it had shifted from W.M.D.’s — which had been a reasonable, if incorrect, basis for war — to liberating the Iraqi people. If Bush had from the beginning justified the war only on grounds of liberation, there would have been no war because there would have been close to zero support for it.
This still leaves the question of what to do now that we are in Iraq. Just because the war was wrong in the first place doesn’t necessarily justify an immediate pullout. There is danger this could make a bad situation worse, might embolden our enemies and invite new attacks. That is why I have hesitated calling for disengagement.
But I have come to the conclusion that the situation could not be any worse and that the American presence in Iraq is causing as much conflict as it is preventing. Therefore, I think we should disengage as rapidly as possible. Adding additional troops, as Bush plans to do, simply means throwing good money after bad.
Perhaps if Bush still had any credibility, I would be willing to give him the benefit of a doubt, as I did four years ago. But since then, we have learned how incredibly poor the prewar intelligence was, how Bush essentially bullied intelligence analysts into giving him the reports he wanted, and how he undertook the war with insufficient forces and without giving any thought to postwar planning or an exit strategy.
At this point, it is obvious even to Bush that the status quo is untenable, and he has put the last of his chips on the table to try to salvage something he can call a victory. But there still is no realistic plan for achieving it — or even a definition of victory in the context of Iraq. Consequently, I don’t see how this troop surge can possibly succeed. All it will do is put off the inevitable pullout by another year or more, which means that hundreds more of our fighting men and women will die in vain.
I think Bush should have the courage to do what Ronald Reagan did in Lebanon. Reagan sent American troops into that country as part of a multinational peacekeeping force in 1982. But after the situation continued to deteriorate and, in October of 1983, 241 Marines were killed when a truck loaded with explosives blew up outside their barracks, Reagan pulled out.
At the peak of the Cold War, this was a very hard thing for Reagan to do. He knew it would show weakness and undermine his position in dealing with the Soviet Union. But he realized, as Bush does not, that you cannot undo a mistake by continuing to make it. All you can do is stop making the mistake, cut your losses and move on.
About a year ago, I was on Chris Matthews’s television show, and he asked whether I thought Reagan would have gone into Iraq. Not having thought about it ahead of time, I gave a poor answer. I said that I believed he would have if he thought Iraq had W.M.D.’s.
I now realize that my answer was wrong. I don’t think Reagan would have invaded Iraq. I think he would have been far more careful than Bush was to make sure the intelligence was right. The debate among Reagan’s advisers would have been much more open, with those opposed to invasion getting a fairer hearing. Also, he would have been much more careful to make sure that we had in place a realistic plan for victory, sufficient forces to do the job, a detailed postwar blueprint, and a clear exit strategy, none of which we have had in Iraq.
More important, I think Reagan would have gone much further than Bush did to exhaust all means of dealing with Hussein before even considering going to war. Reagan would have been far more aggressive about using diplomacy backed up by sanctions and air power. Rather than put American troops in harm’s way, Reagan would have opted for a surgical strike against Hussein, such as the one he attempted against Muammar el-Qaddafi of Libya in 1986. As he did in Nicaragua and Afghanistan, Reagan would have aided those Iraqis opposed to Hussein and allowed them to do the fighting on the ground. I don’t think there is any chance that Reagan would have supported a full-scale military invasion.
It’s too late to undo the damage caused by this ill-conceived war. But at least we can stop doing more damage to Iraq and ourselves. I hope Congress finds a way to force Bush to face reality and end the Iraq operation as quickly as possible.
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January 11, 2007, 7:38 pm
Still the Most Powerful Form of Protest
Great lessons can still be learned from the work of the Rev. Dr. Martin Luther King Jr. — not just for Americans but for people staging protests in other countries.
Looking back from today, people assume it was inevitable that Dr. King would become the leader of the civil rights movement, and that it would proceed in the largely peaceful way it did. In particular, we take for granted that the civil rights revolution — which started with the Montgomery bus boycott in 1955 and ended with the passage of the Voting Rights Act of 1965 — would be overwhelmingly nonviolent.
It didn’t have to happen that way. The civil rights struggle could very easily have been extremely bloody and deadly. Of course, there were the deaths of Medgar Evers, Viola Liuzzo and others. But by the standards of today’s Middle East, the death toll in the civil rights struggle was amazingly small.
It’s important to remember that racial or ethnic oppression can be maintained only by violence. Southerners learned this very early, because most African Americans lived in the South. According to a fascinating study by the U.S. Census Bureau, 93 percent of all blacks in the United States lived in the South in 1830. In Louisiana and South Carolina, they made up almost 60 percent of the population and constituted almost half the population in Florida, Mississippi and Virginia. Across the South, blacks averaged 38 percent of the population.
But even these figures understate the problem for whites, because Southern cities were overwhelmingly white, and the vast majority of blacks lived in lightly populated agricultural areas. According to historian C. Vann Woodward, in 1860, only two percent of the slave population lived in cities.
This meant that whites were a distinct minority of the population throughout the vast bulk of the South’s geographical area. Consequently, they lived in constant fear of a slave revolt and went into full-scale panic whenever one occurred, even in a foreign country like Haiti.
In order to maintain control, a slave patrol system was established throughout the South. All adult white males, including non-slaveholders, were required to participate. These patrols would ride throughout the countryside at night, stopping any blacks found on the roads, demanding a pass and an explanation for their being out and about, and breaking up any unauthorized meetings among slaves.*
These patrols existed for as long as slavery did. After the Civil War, they seamlessly morphed into the Ku Klux Klan, the Red Shirts and other extra-legal organizations with the same purpose: to keep the black population cowed and under control. Fear of the black population is also why Southern society long accepted brutality in law enforcement to a greater degree than other parts of the country did.**
The point of all this is that Dr. King knew perfectly well that there was enormous physical danger in pressing for civil rights in the South. There was every reason to believe that the effort would be suppressed with the most violent methods imaginable. And it would be worse if blacks responded with violence of their own, as many thought was necessary, because it would justify an even more brutal response.***
From the perspective of today, one can easily imagine the kind of violence throughout the South that we witness daily in Iraq. And it is only because of Dr. King’s leadership that such violence didn’t happen. His great insight was that, in holding the moral high ground, civil rights advocates had a very, very powerful weapon, but a fragile one that could be easily lost if the movement succumbed to violence of its own.
Dr. King’s brilliant strategy was to mobilize the power of nonviolence that Mahatma Gandhi had used in India to win victory over the British, who were not shy about using force to maintain their power. What both men understood is that those with legitimate moral claims must use moral methods to achieve their goals, lest they debase themselves to the level of their oppressors and thereby cede the high ground. Moreover, they both understood that while nonviolent methods can be extremely effective, they require incredible patience and self-discipline.
Thus Dr. King’s achievement was not only in recognizing that nonviolence was the best way to achieve the goals of the civil rights movement, but in convincing everyone else in that movement to follow his lead. We forget now how much time and effort he expended calming down the hotheads in groups like the Student Nonviolent Coordinating Committee. Young people, after all, are always impatient and prefer action to obedience.
This is not to say that Dr. King was completely opposed to using violence for the achievement of civil rights. On the contrary, violence was essential — but had to come only from the other side. In King’s famous “Letter From Birmingham Jail” in 1963, he explains that he went to that city precisely because it afforded the greatest likelihood for violent confrontation. King knew that Birmingham’s police commissioner, the infamous Eugene “Bull” Connor, would not be able to restrain himself and would respond to the demonstrations with dogs, nightsticks and fire hoses, which he did. When images of these attacks on peaceful demonstrators came into the living rooms of white America on the nightly news, it led to an outpouring of empathy that made the victory of civil rights inevitable.
I have often wondered why people like the Palestinians haven’t learned from Gandhi and Dr. King. I believe they would have done far more to advance their cause if they had chosen nonviolent protests instead of suicide bombings. Those driven to martyrdom would send a clearer message if they avoided committing violence against others. Imagine if all the suicide bombers had taken their lives the way Buddhist monk Thich Quang Duc did on June 11, 1963, to protest Vietnamese oppression — by pouring gasoline on himself and lighting a match — rather than killing innocent victims. They would have died in a way that brought sympathy to their cause instead of hardening opposition to it.
We owe Dr. King a great debt of gratitude for peacefully bringing about a revolution in race relations in this country that could easily have been extremely deadly. His genius and his success still point the way to victory over oppression everywhere.
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* Here’s a link to a discussion of slave patrols in Georgia. A recent book on this neglected subject is “Slave Patrols: Law and Violence in Virginia and the Carolinas,” by Florida State University historian Sally E. Hadden.
**See Sheldon Hackney, “Southern Violence,” American Historical Review (February 1969), pages 906-25; and John Shelton Reed, “To Live—and Die—in Dixie: A Contribution to the Study of Southern Violence,” Political Science Quarterly (September 1971), pages 429-43.
*** Robert F. Williams was one prominent black leader who strongly advocated violence to achieve racial equality. George Jackson of the Black Panthers was another.
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January 8, 2007, 6:50 pm
Another Puzzled Conservative
One of the most frustrating things about being a conservative these days is suffering from both sides in the debate about George W. Bush. As soon as one admits to being conservative, one is assumed to be a supporter of the administration. It takes a lot of effort to explain why almost nothing this administration has done is “conservative” by the standards of what conservatism has meant historically.
Liberals don’t believe you and figure that you are just a rat deserting the sinking Bush ship. Independents don’t understand what you are talking about, because they have been told over and over again that this is the most conservative administration in history.
Meanwhile, many of those in charge of the institutions of conservatism — magazines, radio talk shows, think tanks, television news networks and such — have adopted the view that Bush defines conservatism. As comedian Stephen Colbert explained to me when I was on his show, a key tenet of conservatism is support for the president. Therefore, whatever Bush does is conservative.
To me, Ronald Reagan was a conservative. Yet conservatives constantly harped on him when he deviated from the conservative line. Reagan was continually berated for not doing enough to cut spending, for acceding to tax increases during budget negotiations, for appointing moderates to key positions, and for not doing enough to pursue a conservative agenda.
Today, many of those same conservative Reagan critics are among Bush’s strongest supporters. They robotically defend everything he does no matter how unconservative or even anti-conservative it is. This phenomenon truly baffles me.
I have been pleased to discover that I am not alone. I have found that a small remnant of the pre-Bush conservative movement is as puzzled as I am about its current direction. One member of this movement is Jeffrey Hart, an emeritus professor of English at Dartmouth and an editor at National Review, the nation’s premier conservative journal, for almost its entire existence. In 2006, he published an official history of the magazine for its 50th anniversary — the first issue appeared in 1956 — titled, “The Making of the Conservative Mind” and published by the Intercollegiate Studies Institute, an organization that promotes conservative scholarship.
In the penultimate chapter, Hart articulates some of my own concerns about Bush’s perversion of conservatism. Hart notes that Bush’s evangelical faith is “proudly nontraditional, even antitraditional, in rejecting historic forms of magisterial Christianity.” Consequently, according to Hart, there is “a kind of anticonservatism built into evangelicalism with the trope of the ‘word of God’ — interpreted independently by each individual Christian — pitted against ‘the tradition of man.’”
In this respect, Hart says, Bush is more an heir to William Jennings Bryan than Reagan. By infusing populist politics and policies, such as free silver, with evangelicalism, Bryan became the most popular Democrat of his era, but he also led his party to defeat in 1896, 1900 and again in 1908. Most Americans didn’t like the idea of a president who took the Bible literally and used it as a guide to government. I don’t think they do today, either.
According to an article about Hart in the January/February 2007 issue of the Dartmouth Alumni Magazine, the editors at National Review forced him to excise most of the criticisms of Bush in his book — including a line calling him the worst president in American history. Even then, plans to distribute the book to guests at National Review’s 50th anniversary dinner were scrapped to avoid embarrassing the White House.
A paperback edition of Hart’s book has just been published, and he has added a new introduction that is the most devastating conservative critique of Bush yet published. He excoriates Bush for managerial incompetence, substituting faith for scientific analysis, disdain for the Constitution, a casual disregard for fiscal integrity, and basing the Iraq invasion on a theory of human nature deeply at odds with historical experience.
I hope that liberals and independents, as well as conservatives, read this new edition so I will no longer have to explain why I am still a conservative and anti-Bush.
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January 4, 2007, 10:31 pm
Bush Recycles the Trash
George W. Bush has not been known as a great proponent of recycling — except when it comes to ideas. It seems he has never proposed a single one that he doesn’t think deserves repeated consideration, no matter how hopeless or discredited it may be.
Bush proved this again on Wednesday. In an op-ed article in The Wall Street Journal, he laid out some areas where he believes that he and the Democratic Congress can work together, which consist entirely of recycled ideas that even the Republican-controlled Congress rejected.
Bush’s biggest pitch was for line-item veto authority. Rather than explain all the problems with this idea, I will simply direct readers to my March 15, 2006, post on this Web site. You see, Bush made exactly the same proposal last year and it sank without a trace — mainly because every budget expert knows that its impact would be extremely limited.
The fact is that the so-called earmarks, which Bush presumably would use his line-item veto to erase, make up at most one percent of the budget, and no one is suggesting that every one of them is without merit and should be abolished. Another of the dirty secrets about earmarks is that many are proposed by the president. We just don’t see them because they are buried in the budget requests of the Transportation Department and other agencies.
We know that presidential pork exists, because every president running for re-election promises spending wherever he thinks it will do him some good — and in 2004 Bush was no exception. Members of Congress rightly ask why their pet projects are routinely portrayed as wasteful while those the president proposed just to win a few votes in key states are assumed to be justified on the merits.
At the very least, the idea of making the line-item veto a key presidential initiative in the seventh year of an administration is uncreative. Even die-hard Bush loyalists see that. For example, former Bush speechwriter David Frum, who wrote a hagiography of Bush in 2003 called “The Right Man,” sees the intellectual bankruptcy of proposing a line-item veto yet again. Said Frum on National Review magazine’s Web site:
Never mind that the Supreme Court has found the line item veto unconstitutional.
Never mind that after six years of presidentially led overspending, it is a bit implausible for the president to try to present himself as the guardian of the public purse against rapacious congresspersons.
Consider only this: Republicans have been suggesting a federal line item veto as a talisman against big government since the middle 1980s. If twenty years later, the line item veto is the only domestic idea a Republican president has to offer — what more emphatic confession of mental exhaustion can an administration give? And if the administration confesses itself exhausted, why should not the Congress elbow it aside? Somebody has to govern after all. . . .
This president has always preferred to retire early for the night. I fear that the whole domestic policy staff seems now to be following the boss’s example, settling in for bedtime two years ahead of schedule.
I couldn’t have said it better myself, and I was fired by a conservative think tank for saying similar things. Perhaps my real sin was saying them too soon.
But proposing a line-item veto isn’t the only thing Bush said in his op-ed that a reasonable conservative would take issue with. He also said that his tax cuts had “fueled robust economic growth and record revenues.” This is evidence of a logical fallacy called post hoc, ergo propter hoc (after this, therefore because of this), which basically means that just because A precedes B, it doesn’t mean that A caused B.
In Bush’s case, he is saying that we had various tax cuts and subsequently achieved robust growth and record revenues. Therefore, the tax cuts caused the growth and the record revenues. No empirical evidence is offered.
However, if you ask most economists, they will more than likely say that the robust growth we have today is simply due to the normal workings of the business cycle — what goes down eventually goes up again. If any governmental action deserves credit, it would be the Federal Reserve’s monetary policy. (The Fed lowered interest rates aggressively as soon as a recession was detected — which it has not always done — and then reversed course in time to prevent an outbreak of inflationary expectations.) The tax cuts undoubtedly raised the growth rate slightly, but at most their effect amounted to only tenths of a percent of the gross domestic product.
Consequently, there is no possible way that the tax cuts can be credited with raising federal revenues, as Bush implies. Studies of the Kennedy tax cut in the 1960s and the Reagan tax cut in the 1980s show that perhaps a third of the gross cost of a tax rate reduction might be recouped through stronger growth. No serious person believes that across-the-board tax cuts of the sort that Bush proposed ever recoup 100 percent of their gross cost. Not even Bush’s own economists. Professor Andrew Samwick of Dartmouth, who served as chief economist of Bush’s Council of Economic Advisers, said this to his former colleagues about Bush’s claim:
You are smart people. You know that the tax cuts have not fueled record revenues. You know what it takes to establish causality. You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one.
Again, I couldn’t have said it better myself.
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January 2, 2007, 10:15 pm
Ford’s Lost Legacy
With the passing of Gerald Ford, we have lost more than a former president who served the nation honorably in trying times. The Republican Party has also lost its last link to a tradition it once embraced. Gone now is any trace of the solid Midwestern ethics that Ford personified — things like not spending more than you take in, being skeptical about the use of force, and not imposing one’s values on others.
Gone also is any trace of the Western-style libertarianism that Barry Goldwater and Ronald Reagan exemplified. Instead, we now have a Republican Party that has imposed vast financial costs on future generations just to win a few votes today, that is hasty and imprudent in the use of force, and that takes a virtually puritanical approach to imposing on everyone the views of evangelical Christians.
Ford and Reagan were much closer to each other philosophically than either of them would be to George W. Bush. Although Reagan and Ford faced off against each other for the Republican presidential nomination in 1976, they weren’t really fighting over basic principles — on those, they mostly agreed with each other. The big debate was about political strategy and tactics.
The Reagan people thought that Ford was insufficiently bold in pursuing a conservative agenda — when he declined, for example, to propose a permanent tax cut and instead, in 1975, offered only a one-shot tax rebate. The Reagan people thought that the Ford people had essentially given up hope of turning around the ship of state and that the best they could do was just keep the ship from sinking on their watch.
Indeed, there was a certain fatalism to the way Ford viewed his options. He had been elected to the House of Representatives in 1948, and during all but two of his long years of service there, the Democrats were in the majority, and Republicans could do little to pursue their agenda. Moreover, in 1974, the Democrats greatly increased their majority, putting many aggressive liberals in positions of leadership for the first time. (The chairmanship of the House Democratic Caucus, for instance, passed from the relatively conservative Olin Teague of Texas to the liberal Phil Burton of California.)
Consequently, Ford saw no chance for any legislation that might fix the problems caused by price controls on energy or skyrocketing entitlement programs. He had his hands full just beating back measures that would have increased spending and made matters worse. But at least he knew how to use his veto pen and did so on 66 occasions in a little more than two years. The fact that Ford was overridden 12 times — the second largest number of any president * — shows just how difficult his political position was.
The circumstances of the time were atrocious. The nation suffered the worst economic recession since the Great Depression** on Ford’s watch, yet inflation remained unacceptably high. The Vietnam War was officially lost while Ford was president. And the Soviet Union was at the peak of its military and political power.
The point is that it was not unreasonable to think, as Ford did, that the best that could be done was just to keep things from getting worse. Some of his younger aides, such as Dick Cheney and Donald Rumsfeld, no doubt chafed at this reality. This may explain why they still exhibit a kind of bunker mentality when criticized. They remember too well the unfair criticism of Ford in 1975 and 1976, when many national problems were simply out of his control.
The more optimistic Reagan people saw the Ford approach as defeatism. In crisis there is opportunity, they thought. And as outsiders, they weren’t awed by the power of the Democratic leadership, the national media or the federal bureaucracy. The Reagan people thought that strong leadership and new ideas about foreign and domestic policy could overcome these forces.
In 1976, Ford probably had the better of this argument. The country wasn’t ready for Reagan that year, and Reagan himself wasn’t really ready to be president either. The nation needed the experience of Jimmy Carter to make Reagan’s presidency possible. The American people needed to give the conventional wisdom one last shot at fixing the country’s problems before they would be open to new conservative ideas. And Reagan needed time out of office to study and think and discuss these ideas, and learn to articulate them and how to implement them.***
By contrast, the current President Bush came to office without ever having had the humbling experience of laboring for years as a minority leader in Congress or the long years of thought and study Reagan put in on the problems of public policy. From his life in the West, Bush picked up none of Goldwater’s libertarianism, but instead absorbed the bravado and evangelicalism that are characteristic of many Texans.
I would be less concerned if I thought Bush was an isolated case of a president out of step with his own party, as Carter was. What bothers me is that I don’t see anyone in the Republican Party today who exemplifies either Ford’s philosophy or Reagan’s. Yet I believe that many at the party’s grass roots yearn for a leader who has Ford’s humility and prudence and Reagan’s optimism and love of ideas, and none of Bush’s overconfidence and anti-intellectualism.
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* Andrew Johnson was overridden the most times, with 15 overrides. Ford is tied with Harry Truman, but Truman served almost four times as long.
** It’s a source of some irritation to me that politicians are always saying that the latest recession was the worst since the Great Depression. By any measure, the one Ford dealt with was the worst. Raw data can be found here.
*** To learn about the research Reagan did in the late 1970s and the evolution of his thinking, I strongly recommend reading “Reagan’s Path to Victory,” by Kiron Skinner, Annelise Anderson and Martin Anderson, which contains many of Reagan’s own writings. Clearly, by 1980, he was much better prepared to be president than he was in 1976.
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April 6, 2006, 10:34 pm
The Next President’s Budget Crisis
This week, former Treasury secretary Robert Rubin and some other prominent Democrats announced the formation of yet another think tank, the Hamilton Project, named for Alexander Hamilton, the first Secretary of the Treasury. It appears that Democrats are starting to feel confident about retaking the White House in 2008 and are moving to build a foundation of issue analyses and policy initiatives that their candidate can run on and, if elected, use to govern. The Hamilton Project’s first papers put forward some ideas for improving education and saving by low-income households.
These proposals are fine as far as they go. But the proverbial elephant in the living room is the budgetary situation, which is going to make it very difficult for the next president to do much of anything that costs money. The first baby boomers turn 62 in 2008 and most are expected to start drawing early Social Security benefits almost immediately. Three years later, when they turn 65 — still in the first term of our next president — they will become eligible for Medicare.
Both Republicans and Democrats have avoided dealing with this elephant because to seriously do so would require confronting a very unpleasant reality — that only massive spending cuts or tax increases can prevent a financial crisis. Each party fears being pilloried by the other if it dares to even hint at the necessity of benefit cuts and tax increases.
Consequently, both parties proceed with the delusion that relatively modest, and politically painless, fiscal adjustments can keep the government running. Democrats like to believe that the Bush tax cuts are all that is standing in the way of every policy they would like to see enacted. But even if all those tax cuts disappeared tomorrow, the money that would come in would provide only a drop in the bucket of what is needed to deal with looming fiscal problems. It would cover maybe a tenth of the spending that is already in the pipeline.
Republicans have their own delusions. To hear them talk, all we need to do to fix the budget is get rid of pork-barrel spending — perhaps by giving the president line-item veto power. But as a new report from Citizens Against Government Waste documents, this, too, would provide only a drop in the bucket. Getting rid of all pork-barrel projects in the federal budget would reduce spending by only $29 billion this year (a trivial amount in a $2.5 trillion budget). Moreover, as a recent Congressional Research Service report explains, the president doesn’t need a line-item veto to cut pork from the budget. He could, if he wanted, cancel 95 percent of earmarks today, because they are not actually line items in the budget. They are Congressional suggestions that he may ignore at will.
What is critically needed is for everyone to agree on the nature of our long-term budgetary problem and the realistic options we have for dealing with it, on both the spending and revenue sides. We cannot avoid a future financial crisis just by raising taxes or by cutting spending. And we will get nowhere by avoiding the elephant of entitlements. That means we must confront the all-powerful AARP, which grows stronger each day as an increasing portion of the population turns 65. (Over the next 25 years, according to the Census Bureau, the percentage of the population 65 and older will rise by 60 percent.)
I’m all for cutting spending. As a libertarian, I think the federal government does far too much, and if I had the power, I would slash spending to less than half what it is. But I don’t have that power, and I would not support giving anyone that power because it cuts both ways. And I have worked in Washington too long to delude myself about what budgetary changes are attainable. Those on both the left and the right need to come up with ideas that appeal to lawmakers across the political spectrum.
I continue to believe that financial markets will one day wake up and notice the deficit. Like Claude Rains’s Capt. Renault in “Casablanca,” they will be “shocked, shocked” to discover this problem. But they could put irresistible pressure on both parties to act meaningfully. Whatever their public pronouncements today, Democrats and Republicans alike should be considering their bottom-line positions. When the markets finally react, whichever side is best prepared will have the greater chance of controlling the agenda and seeing its policies enacted.
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April 4, 2006, 10:10 pm
Tax Cuts Don’t ‘Starve the Beast’
Liberals generally believe that conservatives support tax cuts mainly out of selfish personal interest. In truth they have a more noble motivation—though liberals don’t like it any better. Most conservatives believe that the best way to downsize government is to take away its allowance, as Ronald Reagan once put it. In other words, tax cuts will lead to spending cuts.
This is a theory I once subscribed to. Back in the days when people cared about federal budget deficits, there was a case to be made that intentionally increasing the deficit by reducing revenues would put downward pressure on spending. Today, unfortunately, the evidence seems to point in exactly the opposite direction.
At the time that I drafted the Kemp-Roth tax bill, in 1977, the Republican Party still believed that budget deficits were evil. Republicans would often even support tax increases, such as in 1969, to balance the budget. But they came to believe that higher taxes only encouraged higher spending—until a politically intolerable deficit emerged, at which point they would again be pressured to support tax increases. Eventually, Republicans like Newt Gingrich would charge that their party had become the tax collector for the welfare state.
Back in the 1970’s, it wasn’t necessary for Republicans or Democrats to raise taxes explicitly; the tax code did it for them. Because the code was not indexed to inflation, taxpayers were often pushed up into higher tax brackets when they received a cost-of-living pay raise. Their purchasing power would not increase, but the tax system would treat them as if they had gotten a real increase in income. It was commonly estimated during that time that federal revenues rose 1.6 times faster than the rate of inflation.
With inflation at double-digit levels in the late 1970’s (and with economists generally believing that it would take many years for those levels to fall), projecting balanced budgets was easy. Theoretically, the government could slow the growth of spending just a little, and revenues would catch up. In practice, of course, revenues did not catch up—because spending rose too fast—so actual deficits never shrunk.
This had a profound effect on conservative thinking. Historically, conservatives had viewed deficits as immoral because they allowed the government to spend more at the expense of future generations, because deficits were viewed as inflationary, and because they led to an increase in the size of government. But the failure of balanced budgets to emerge despite large tax increases led conservatives to question whether balancing the budget was a worthwhile goal.
At this point, in the late 1970’s, a few conservatives like Jack Kemp, who was a congressman from Buffalo, N.Y., said to heck with the balanced budget. Let’s just cut taxes and see what happens. Mr. Kemp predicted that economic growth would rise so much that revenues might not even fall.
Most mainstream conservatives didn’t buy Mr. Kemp’s strategy right away. But after Californians passed Proposition 13 in 1978, they could see that tax cutting was politically popular. They had also learned the hard way that trying to cut spending at a time when revenue was rapidly rising was politically impossible.
So Republican Congressional leaders and conservative economists like Alan Greenspan and Herb Stein came to support tax cuts as a strategy to force spending cuts. David Stockman, who was a congressman from Michigan and later director of the Office of Management and Budget under President Reagan, was among the most enthusiastic converts to what came to be called the “starve the beast” theory of taxation.
This led to a coalition of three groups — supply-siders who thought tax cuts would increase revenues, libertarians who were in favor of all tax cuts, and traditional conservatives who wanted to cut spending and balance the budget. Ronald Reagan, embodying all three perspectives, unified the Republican Party around the idea of reducing tax rates without specifying any complementary spending cuts (which would have cost him support among those who might have lost government benefits).
In the 1980’s, there was some evidence that the starve-the-beast theory worked. Almost every year, budget deals cut spending a bit, although tax increases were always part of the mix. Ultimately, President Reagan supported tax increases that took back about half of his 1981 tax cut.
Nevertheless, the idea that tax cuts would downsize government became Republican dogma. Today, most Republicans in Congress view tax cuts as the only thing needed to reduce the size of government—and the connection between deficits and spending seems forgotten. Now Republicans raise spending and cut taxes at the same time.
As a consequence, the old starve-the-beast theory has been turned on its head. Economist Bill Niskanen of the Cato Institute has found that tax cuts now actually lead to spending increases. This suggests that higher taxes would reduce spending.
I think that higher taxes are inevitable, as I have explained in previous posts. If conservatives recognize this reality, perhaps they can force meaningful spending cuts as their price for supporting them. In any case, the starve-the-beast theory is as dead as the dodo.
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March 31, 2006, 3:06 pm
Bush Plays the Same Old Hand
Andrew H. Card Jr. and President Bush yesterday at White House.
(Jason Reed/Reuters)
Washington is still atwitter over the resignation of Andrew Card as White House chief of staff and the appointment of his replacement, Josh Bolten, the director of the Office of Management and Budget. Much of the buzz comes from the belief that President Bush may be listening to the Washington establishment, which has been urging him to reinvigorate his administration and lift his lowly poll ratings.
If Mr. Bush were planning on changing direction in some way, staff changes might be useful. They might be a signal that a serious effort is being made this time around.
The problem is that only one part of Mr. Bush’s team ever gets shaken up. Whenever things are not working, the economic advisors seem to take most of the blame, while even dramatic failures by other staff members cause no repercussions. No one was fired for the prewar intelligence failures in Iraq. The person most to blame, George Tenet, the former Director of Central Intelligence, was given a medal. Michael Chertoff is still Secretary of Homeland Security even though his agency was responsible for many of the screw-ups related to Hurricane Katrina.
In contrast, in 2002, Treasury Secretary Paul O’Neill was publicly fired — along with Larry Lindsey, Director of the National Economic Council — in a fashion that suggested there was more to it than a mere desire to change staff. Why Bush could not have told the two men privately that he wanted to make a change and allow them to leave with their dignity intact has never been explained. Instead, Vice President Dick Cheney phoned Mr. O’Neill to tell him he was out — this after Mr. O’Neill had personally asked Bush if he wanted him to leave and was told no. Mr. Lindsey was fired by Mr. Card the same day for no apparent reason.
Neither Mr. O’Neill nor Mr. Lindsey had been desperately clinging to their jobs. Both would have resigned in a heartbeat if they knew that the president was displeased with their performance. Both deserved to have Mr. Bush himself tell them they were out.
The firings sent a message to everyone in the administration that they were expendable and could be dispensed with at a moment’s notice. They would not even be permitted the face-saving gesture of quitting for “personal reasons” if Mr. Bush thought there was some benefit to publicly throwing them overboard.
The effect was to dampen what little initiative and independence might have existed within the administration. Mr. O’Neill’s replacement, John Snow, got the message that he must not take the lead on any issue, even those in Treasury’s domain. His only job seems to be greeting every new economic statistic as if the nation had won the lottery. The economic news has been fairly good. But according to many news reports, Mr. Bush apparently still believes he has not gotten enough credit, and that this is the primary reason for his low poll ratings.
Mr. Bush’s managerial style has been manifestly unsuccessful — the imploding of his Social Security reform effort is one example — yet there is no indication that he will change his approach. Indeed, it seems that Mr. Bolten’s main job will be to enforce even greater discipline; it has been reported that his first job will be to find a replacement for Mr. Snow, whose departure has been rumored almost since the day he was sworn in.
I have no doubt that Mr. Bolten will do his job with ruthless efficiency, for he is the truest of Mr. Bush’s true believers. I know this because I have observed it firsthand.
Josh Bolten and I often worked together during the George H.W. Bush administration, when I was deputy assistant secretary for economic policy and he held positions in the White House and U.S. trade representative’s office. We weren’t pals, but we were always on friendly terms.
Then, a couple of years into the current administration, I saw him at a reception. I had just started writing some mildly critical things about some of Mr. Bush’s policies, like the Medicare drug program, which I thought was unaffordable. Up until that time, I had been almost entirely positive in my writings about the administration.
So I was taken aback when I went up to Mr. Bolten to say hello and he pointedly turned his back on me and walked away. I guess he thought he was punishing me for my criticism. All this did was confirm my growing belief that Mr. Bush would ultimately be a disaster for the Republican Party and the conservative movement.
The funny thing is that I was treated far better by Bill Clinton’s people while he was in office, even though I almost never had a good word to say about their positions. To their credit, they really believed in what they were doing and were almost evangelical in their desire to explain why it was right, even to Republicans like me who were unlikely to ever embrace their message. I have no doubt that if I had come across Gene Sperling, one of Clinton’s closest economic advisers, at such a reception, he would have come straight at me with a laundry list of facts and arguments for why I was wrong to be critical. I would have been invited to the White House mess to carry on the conversation, and I would have left with an armful of studies and statistics explaining the virtues of whatever Clinton program I was attacking.
By contrast, the Bush administration never provides its supporters with any ammunition to defend its positions, beyond the endless repetition of the day’s talking points. Even in Mr. Bush’s early days in the White House, when I was supporting the administration down the line and dealing with people I had known for years, I was never able to get anything substantive out them beyond the line of the day. I often had to do my own studies and crunch my own numbers to get evidence to support Mr. Bush’s policies.
So I see no reason to believe that anything substantive will change in this White House, no matter how many staff changes are made. This administration is like a gambler who doubles up after every losing hand in the vain hope of covering his losses. That strategy doesn’t work in Las Vegas, and it doesn’t work in Washington either.
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March 28, 2006, 5:37 pm
The Best Kind of Tax
In my previous post, I tried to show that the magnitude of growth in government spending already in the pipeline is so great that it cannot be contained just by cutting. Those who think otherwise usually fall into two camps: utopians who think Congress will someday slash programs like Medicare, even though tens of millions of voters depend on them, and those who don’t know the nature of federal spending.
On radio shows, callers routinely tell me that national defense eats up 50 percent or more of the budget and so we can just cut that. Actually, defense takes up less than 19 percent of spending and would have to be completely abolished to pay for the near-term growth in Medicare alone.
Others point to “pork” or “earmarks” in the budget—public works projects inserted into spending bills that principally benefit an individual congressman’s district or a senator’s state. But last year, all such projects taken together added only $27.3 billion to the federal budget, according to Citizens Against Government Waste, a watchdog group. In a $2.5 trillion budget, this is a trivial sum.
Those who still believe that spending cuts can solve our budget problem should consult a document called “Budget Options,” published last year by the Congressional Budget Office. It contains hundreds of spending and revenue proposals that could save large sums. But finding the votes for even the small proposals is extremely difficult. Earlier this year, Congress had extraordinary difficulty passing the Deficit Reduction Act of 2005, which cut the budget by only $40 billion over five years. To keep the deficit from rising down the road, Congress will need to pass budget reductions 100 times larger.
It is far more realistic to assume that the bulk of deficit reduction will come from higher revenues. I say this because every major deficit reduction effort of the last 25 years has relied mainly on higher revenues. Most of the savings included in these efforts have not been real spending cuts but merely promises to hold down future appropriations—in other words, smoke and mirrors. Only the tax increases have been real. As I note in my book, Ronald Reagan signed into law tax increases of $132.7 billion per year by 1988—equal to 2.6 percent of gross domestic product, or $340 billion in today’s economy.
To reduce the deficit, we will need to increase revenue by about 10 percent of G.D.P. per year over the course of the next generation, raising revenues to 28 percent of G.D.P., from about 18 percent. The individual income tax now raises 7.7 percent of G.D.P., and the corporate income tax raises 2.3 percent. So individual and corporate income tax rates would have to double to get the needed revenue—and that assumes that there would be no falloff in growth from such a rate increase.
But such massive income tax increases are not going to happen. Our tax system is creaking and groaning as it is. We already have a large and growing “tax gap,” according to the Internal Revenue Service, as people evade paying the existing rates. Increased enforcement could raise more revenue, but that would require more resources for the I.R.S. and the imposition of draconian collection methods that are unlikely to be sanctioned by Congress.
Many people believe that simply allowing the Bush tax cuts to expire on schedule at the end of 2010 would be enough to avoid more onerous spending or revenue adjustments. But according to the Congressional Budget Office, elimination of the tax cuts would raise revenue by only a little over 1 percent of G.D.P. By 2016, revenues would rise only to 19.7 percent of G.D.P.—even taking into account the revenue increase that would result from real growth (which pushes people into higher tax brackets) and the increasing reach of the Alternative Minimum Tax. That is not even close to how much will be required.
So we are left with the need for a new revenue source. When confronted by the need to pay for health and other spending programs, every other major country has turned to the value-added tax, or V.A.T. This is the best strategy tax economists have ever devised for raising revenue without investing a lot in enforcement and economic incentives.
The V.A.T. is a kind of sales tax embedded in the price of goods. A farmer who grows wheat, for example, pays, say, 10 percent on the sale. The miller buys the wheat (with the tax indicated on the invoice), makes flour, and when that is sold, he also pays 10 percent, but gets a credit for the taxes the farmer paid. The baker who makes bread from the flour also pays 10 percent when he sells to the food store, but gets credit for the taxes paid by the farmer and the miller. Since taxes must be paid in order to claim credits for the taxes embedded in the bread at earlier stages of production, the tax is largely self-enforcing.
And because the tax is applied only to consumption, its impact on incentives is minimal. It can also be rebated at the border on exports, because when exporters sell goods, they can claim credit for taxes they have paid without themselves collecting any taxes on the sale. Many manufacturers believe this aids their international competitiveness, because under world trade law, other forms of taxation may not be rebated in this way.
According to the International Monetary Fund, the tax base for the V.A. T. is about 37 percent of G.D.P. in industrialized countries. With our G.D.P. close to $13 trillion, that means about $5 trillion would be available for taxation. A 10-percent V.A.T. would raise $500 billion in new annual revenue (10 percent of $5 trillion). The average V.A.T. rate is 18 percent, according to the Organization for Economic Cooperation and Development, ranging from a low of 5 percent in Japan to a high of 25 percent in Sweden, Denmark and Hungary.
We should bite the bullet and put in a V.A.T. For now, the revenue could be used to fix glaring problems in the tax code, such as the Alternative Minimum Tax. In the longer run, it could be raised gradually to pay for Medicare and other programs. The burden is on those who oppose a V.A.T. to spell out how spending could otherwise be cut or taxes raised by the order of magnitude I have outlined.
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March 23, 2006, 11:42 am
The Real Budget Crunchers
Recently, there has been some discussion on the blogs about growth of the federal budget deficit under President Bush and what measures would be necessary to balance the budget without raising taxes. When I thought this matter through a few years ago, I concluded that it was impossible to cut spending enough to avoid a major tax increase. Moreover, I concluded that the magnitude of the tax increase was so great that it could only be achieved by adding a significant new revenue source — a value-added tax, or V.A.T. — to the federal tax system on top of all the other taxes. Today, I would like to walk people through the data sources so that they can draw their own conclusions about what needs to be done and what might be possible.
First of all, people need to know what the basic numbers are about spending trends. Most economists rely on the Congressional Budget Office for this. A good place to start is with the historical data here. Ignore all the dollar figures, since they really don’t tell you anything meaningful. Because of inflation, economic growth and population increases, taxes and spending in dollar terms today cannot meaningfully be compared to that in the past. Instead, concentrate on the figures that are shown as percentages of the gross domestic product or G.D.P. These figures show the burden of taxation and spending as a share of the economy’s ability to bear that burden and are best for comparative analysis.
The budget office data show that between 2000 and 2005, the federal budget went from a surplus of 2.4 percent of gross domestic product to a deficit of 2.6 percent. This has resulted from a fall in federal revenues of 3.4 percent of G.D.P. and a rise in spending of 1.7 percent. The fall in revenue resulted almost entirely from a decline in personal income taxes, which have dropped from 10.3 percent of G.D.P. in 2000 to 7.5 percent in 2005. Contrary to popular belief, corporate taxes have actually risen a bit while all other revenues are about the same as a share of G.D.P.
On the spending side, most of the increase — 1.6 percent of gross domestic product — has been for so-called discretionary programs, those requiring annual appropriations. Mandatory spending, such as Social Security and Medicare, rose from 10.6 percent of G.D.P. to 11.8 percent. Within the discretionary accounts, most of the increase has been for defense, which has risen by 1 percent of G.D.P. Domestic discretionary programs have risen by 0.4 percent.
Some people will look at these numbers and say that the Bush tax cuts are the principal cause of the rise in the deficit. If we simply repeal the tax cuts, much of the deficit will disappear. Since all of the Bush tax cuts expire at the end of 2010, the next president will have an easy opportunity to act on it by vetoing any effort to extend those cuts. He or she will only need the support of one-third of those in either the House or the Senate for such a veto to be sustained. The possibility that they will have been made permanent by that date is extremely low because it would require 60 votes in the Senate, because of something called the Byrd rule; those votes do not exist and probably won’t any time soon.
Others will look at the data and say that almost all the increase in spending is due to the “war on terror” and should be excused. The remaining increase in domestic discretionary spending is not that great and the rise in mandatory spending was out of President Bush’s control. But whether justified or not, the Iraq War is still going to cost a great deal for many years to come. A recent estimate by the economists Linda Bilmes and Joseph Stiglitz pegged the ultimate cost at as much as $1.3 trillion, of which only $250 billion has been spent so far.
Where I really fault President Bush on the budget is with the Medicare drug benefit, which he rammed through Congress in 2003 and which will raise spending far into the future. According to the 2005 Medicare trustees report, the future unfunded liability for Medicare Part A is 2.5 percent of G.D.P. in perpetuity (page 64). The unfunded liability of Medicare Part B is 2.7 percent of G.D.P. (page 101). And the unfunded liability of Medicare Part D, the drug benefit, is 1.9 percent of G.D.P. (page 112). In other words, we would need to increase taxes by 7.1 percent of G.D.P. immediately and forever just to pay for all the Medicare benefits that have been promised — an amount close to what is now raised by the individual income tax.
By the way, the 2005 Social Security trustees report says that the unfunded liability of that program, which Mr. Bush told us over and over again was in dire need of a fix last year, has an unfunded liability of just 1.2 percent of G.D.P. (page 60) — virtually nothing compared to Medicare’s problems. This is especially so when one considers that pension obligations can be estimated very accurately, while those for health care spending are very difficult to predict because of changes in technology and other factors.
In short, President Bush got everything backwards. He made the Medicare problem far worse when he should have been making every possible effort to improve its finances. Then he wasted an enormous amount of energy on Social Security reform when that program’s financial problems are a fraction of Medicare’s. And by failing to fix Social Security, he has still left this as a problem for a future president to deal with.
In President Bush’s most recent budget, there is a chapter on “stewardship” in the Analytical Perspectives volume. It gives long-term budget projections far into the future (p. 185). They show that without any change in law, mandatory spending will rise from 9.8 percent of G.D.P. in 2000 to 21 percent in 2080. The bulk of this growth is accounted for by Medicare, which will rise from two percent of G.D.P. to 10.4 percent over this period. By contrast, Social Security only rises from 4.2 percent to 6.4 percent of G.D.P.
A Congressional Budget Office study in December projected Medicare and Medicaid spending rising from 5 percent of G.D.P. in 2010 under its “intermediate” scenario to 12.6 percent by 2050 (page 4). Under its higher-spending scenario, which I consider more realistic, spending for Medicare and Medicaid would rise to 21.9 percent of G.D.P.
A study by the Government Accountability Office in January projected an increase in Medicare and Medicaid from 3.9 percent of G.D.P. in 2005 to 14.4 percent in 2064. Unless taxes rise above 19.7 percent of G.D.P. — the maximum assumed under current law with all expiring tax cuts extended — the budget deficit will become so large that interest on the debt will rise from 1.5 percent of the gross domestic product to 26 percent. The national debt would rise from 37.4 percent of G.D.P. to 551 percent in 2064.
What all these studies show is the same order of magnitude. Federal spending as a share of gross domestic product is going to rise by about 10 percentage points of G.D.P. over the next generation — the equivalent of $1.2 trillion per year in today’s economy — simply because of the aging of society, even if no new government programs are enacted. To prevent it just through cutting spending would require the abolition of every single thing the government does other than Social Security, Medicare and Medicaid — including the entire Department of Defense.
Obviously, this is not going to happen. And given the political clout of the elderly — who vote in the highest percentages of any age group in society — it seems unrealistic to me that significant savings can be achieved by cutting programs that benefit them. Although some relatively modest program changes, like raising the retirement age, could save large sums over time, such changes require long phase-in periods to allow people to adjust. Thus we are still left with a huge increase in spending as a share of the economy for the foreseeable future. In a future post, I will explain why I think a value added tax is the best way to deal with this reality.
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About Bruce Bartlett
Bruce Bruce Bartlett is the author of "Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy." In the 1980's, Mr. Bartlett was the executive director of the Joint Economic Committee of Congress. He later worked in the Reagan White House and in the Treasury Department during the administration of President George H.W. Bush.
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