As in 1984, we need the courage to raise taxes
By Walter Mondale,
We will not be able to control our budget deficits without raising taxes. That simple reality has brought us to a moment of truth in American politics. President Obama’s speech Wednesday lived up to that moment, and now Democrats and Republicans in Congress must take a similar stand.
Many have described my 1984 presidential campaign promise to raise taxes as exemplifying the folly of proposing tax hikes during an election. Although the rebounding economy and improving job picture that year probably had more to do with President Ronald Reagan’s reelection than my pledge did, there are certainly political lessons for anyone considering tax increases today. In particular, avoid generalities, and clearly link taxes to addressing concrete national needs.
Taxes reveal who we are as a people and what we value. Polls consistently show that majorities of Americans are willing to pay taxes and even have them increased when the revenues are devoted to their priorities, such as education, health care and deficit reduction. The public’s support is greatest for raising taxes on the affluent, but it extends to hikes tied to popular programs such as Social Security and Medicare.
Moreover, Americans are not fans of tax cuts when pitted against other priorities. Republicans know this: During the battle over President George W. Bush’s 2001 tax cuts, the talking points for then-Treasury Secretary Paul O’Neill leaked out. Revealingly, they warned him to “make clear that there are no trade-offs” because “the public prefers spending on things like health care and education over cutting taxes.” If you watch carefully, you will see some Republicans today practicing the same dance steps, weaving and ducking in the face of unavoidable and cruel trade-offs.
I told the truth in 1984. “The American people will have to pay Mr. Reagan’s bills,” I said in my acceptance speech at the Democratic National Convention in San Francisco. “The budget will be squeezed. Taxes will go up. . . . It must be done. Mr. Reagan will raise taxes, and so will I. He won’t tell you. I just did.”
I lost the election, but I won the debate. Reagan ended up increasing taxes in 1984, 1985, 1986 and 1987 to mend the budget and tax systems.
Elections since 1984 have demonstrated that favoring higher taxes to pay for specific priorities can be a winning political formula. Bill Clinton and Barack Obama both prevailed with well-executed and honest proposals to raise taxes for concrete purposes that Americans favored.
It makes sense to seize today’s bipartisan support for cutting tax exemptions as a way to increase revenue. I also believe that we must eliminate Bush’s tax cuts for the rich. Where is the decency in cutting taxes for those making tens of millions while middle America struggles? This is a fight over fairness that Americans can understand.
Republicans are not risk-free in the tax debate. GOP politicians promise to reduce the deficit, but the indisputable record of Bush shows that his first priority was cutting taxes for the super-rich, even when that brought higher deficits. This record has bred distrust among the conservative base, including tea party sympathizers. One of Reagan’s domestic policy advisers, Bruce Bartlett, wrote a book in 2006 titled “Impostor,” decrying Bush’s phoniness on deficits and spending. Talking about shrinking deficits while cutting taxes for the the wealthiest does not attract conservative populists or swing voters.
I am worried about claims by some Republicans — such as Senate Minority Leader Mitch McConnell (Ky.), House Budget Committee Chairman Paul Ryan (Wis.) and the many who echo their words — that taxes are too high. Here are the facts: Tax rates are at their lowest in decades, and revenue has fallen to a 40-year low as a percentage of our gross domestic product, according to the Congressional Budget Office.
Calls to cut taxes further, in the belief that doing so will spur revenue and close deficits, brings me back to 1984. How many times will we fall for the same disproved proposition? Cutting taxes inescapably contributed to the deficits that America saw under Reagan and George W. Bush. Ryan’s budget road map preaches fiscal probity, but the $4 trillion it pours into cutting taxes for the most affluent will increase the deficit. The CBO recently reported that the Ryan proposal will increase debt as a proportion of GDP by 2022.
The record of Republican and Democratic presidents alike shows that the only way to bring down deficits is to include tax increases in the mix. President Carter and I, as well as George H.W. Bush and Clinton, all used some version of that recipe. Today, efforts to restore tax revenue will need to be spread out over several years, as Obama proposes, to avoid cutting short the recovery.
I come from a tradition of progressive realism — I accept the need to live within our means while believing that we can build a fairer America that opens doors. I worry that the human cost of failing to shore up our revenue has been lost in the haze of budget numbers and spin. Avoiding savage tradeoffs and reversing a disturbing trend of economic decline requires us to restore taxes on the affluent and perhaps increase revenue in other ways, such as reducing the deductibility of mortgage interest for wealthy homeowners, cutting subsidies for large, corporate absentee-owned farm operations, reducing tax preferences for oil companies and closing loopholes that prevent huge corporations from paying taxes.
I am troubled by cuts in infrastructure investments, which enjoy support from business and labor as a source of jobs and future economic prosperity. I am ashamed that America leads affluent democracies in the number of people (including children) who live in poverty.I am perplexed by the shortsightedness of reducing support for smart, hard-working college students. And where is our decency when we cut back on medical care for the ill?
These are neither humane nor necessary choices. We are better than that. We can and must restore fiscal discipline while showing mercy and justice for the most vulnerable.
As a senator from Minnesota and then as vice president, I fought hard to ensure civil rights, expand opportunity and hold presidential power accountable. But, more than a few times, I surprised friends and colleagues with my insistence on fiscal honesty and realism. I believed then — and firmly believe now — that holding down deficits is key to the credibility of Democrats and to protecting against inflation, a disease that hurts the poor most. I worked with congressional Republicans to improve fiscal discipline and to create the CBO as an honest scorekeeper. I worked hard with Carter to cut spending and nearly balance the budget, even of it may have hurt us electorally.
Today, we need Republicans and Democrats to return to that tradition of putting country ahead of politics — to agree to tax increases as part of a package that would also cut spending and reform entitlements in ways that control long-term costs and protect those who depend on them. This is what we have done in the past, and it is what we must do to secure America’s future.
Walter F. Mondale served as senator from Minnesota from 1964 to 1976 and U.S. vice president from 1977 to 1981. He was the Democratic presidential nominee in 1984.