A war tax? It’s still not a bad idea
By Walter Pincus,
White House press secretary Jay Carney last Wednesday caught my eye when he talked about members of Congress, currently vocal about the deficit, who were on Capitol Hill over the past decade and voted for unpaid large tax cuts but “put two wars on the credit card without paying for them.”
That last phrase reflected words used in 2007 by several House Democrats who wanted to institute a war surtax to pay for the then-increasing costs of U.S. activities in Iraq and Afghanistan.
These days, one of them, Rep. Jim McGovern (D-Mass.), believes such a levy should be on the agenda of the debt-reduction “supercommittee.”
“These wars ought to be paid for and not put on a credit card so that our kids will have to pay for this in the future,” McGovern said in a recent telephone interview. “It’s morally wrong for members [of Congress] to call for support of our soldiers and then not ask the rest of us to pay for it . . . or have it left to the poor and middle-income and seniors to bear the sacrifice along with our soldiers and their families. That’s wrong.”
More than $1 trillion already has been added to the deficit by expenditures generated by Iraq and Afghanistan, the first wars undertaken by U.S. presidents since the War of 1812 that have not been financed in part by a special tax. There were three taxes instituted to pay for the Civil War.
In the Spanish-American War, political leaders felt compelled to pay for most war costs because it was a war of choice, not compulsion.
World War I saw a debate about sharing the cost with future generations. The Washington Post wrote at the time, “ ‘Pay as you go’ is the reply of those who insist that present-day taxpayers shall carry the whole burden of present and future preparedness.”
No one complained about the heavy new taxes during the years of fighting in World War II and even in the postwar period, when funds, such as those that financed the Marshall Plan, helped pay for reconstruction of Europe. And even though many of those taxes were still in place when the Korean War broke out, Congress still passed new taxes in 1950 and 1951 to help pay for that conflict.
For the Vietnam War, even though President Lyndon B. Johnson had said the country could have “guns and butter” for a time, in 1968 Congress passed a 10 percent surcharge, which meant 10 percent of owed income tax was added to the bill to pay for the war.
The Congressional Budget Office this year estimated the total costs of Afghanistan and Iraq, projected out to 2017, could reach $2.4 trillion, if you include $705 billion in interest for the money borrowed to finance them.
A 10 percent tax surcharge, similar to the one during the Vietnam War, would bring in roughly $112 billion if applied in 2012, according to Alan D. Viard, a scholar at the American Enterprise Institute and former senior economist at the Federal Reserve Bank of Dallas. That would just about cover the expected $116 billion for war costs in 2012.
Although Viard said he was not endorsing such a step, he said the surtax would not affect the 40 percent of American households that pay no income tax at all and would add just one-tenth to rates of those who do pay income tax.
When McGovern and Reps. David R. Obey (D-Wis.) and John P. Murtha (D-Pa.) suggested a 2 percent surcharge for middle-income taxpayers and up to 15 percent for the wealthiest four years ago, even the House Democratic leadership did not support them. Some Republicans accused them of using the taxes to generate opposition to the wars.
In 2009, when President Obama proposed his surge of 30,000 troops for Afghanistan and Obey again proposed a surtax, “it got no traction,” McGovern said. McGovern said he recently brought it up in a Democratic Caucus session with the president but “did not get a direct answer.”
Given the current concern about the deficit and finding a balanced way into the future, McGovern argued, “I think the White House should take a look at this and it should be back on the table for the supercommittee.”
Asked about a war tax, Rep. Howard P. “Buck” McKeon (R-Calif.), chairman of the House Armed Services Committee, responded that the questioner “can always send in more to the Treasury if you like, and I would encourage you to do that if you feel that way.” McGovern called that answer “flippant on a serious issue.”
Sen. Rob Portman (Ohio), one of three Republican senators appointed to the deficit reduction panel, was President George W. Bush’s director of the Office of Management and Budget in 2006 and 2007. In 2006, he told Congress increased tax revenue resulting from economic activity spurred by the Bush tax cuts helped offset the war’s high costs, but the deficit that year was still $248 billion.
In February 2007, at a House Budget Committee hearing, Portman said: “We have good news for the American people. . . . The president’s 2008 budget reduces the deficit every year and balances the budget by 2012, while meeting our nation’s priorities.”
Rep. John M. Spratt Jr. (D-S.C.), who was then chairman of the committee, pointed out that the Bush projected 2012 budget surplus of some $61 billion assumed costs of the two wars — which were $170 billion in 2007 — would be $50 billion by 2009 and zero after that.
What lessons should Portman and his colleagues take from that as the supercommittee begins its deliberations? McGovern’s war tax surcharge won’t solve the problem, but it is a step in a historically and morally right direction.