The Home Front
Even as military strategists in the Persian Gulf site their next targets, a campaign within our borders moves ahead. This domestic war—ostensibly a call for national sacrifice and fairness—targets taxpayers and threatens our ability to recover from the recession.
For a sizable number of protesters, the war is simply a news peg, an excuse to trumpet their favorite cause. In a Los Angeles Times op-ed piece, three Institute for Policy Studies staffers complained that the war prevents spending on government education, child care, and jobs programs. Soon after the war broke out, ACT-UP activists disrupted broadcasts by Dan Rather and Robert MacNeil, chanting, "fight AIDS, not Arabs." The perpetual picketers in Lafayette Park portray the war as a racist scheme pitting blacks and Latinos against Arabs.
But other critics specifically raise the question of economic fairness. Senate Majority Leader George Mitchell, perhaps signaling a surtax on millionaires, said in the Democratic response to the State of the Union address: "We've got to bring the deficits down and the jobs home. The president's way to do that is to give huge tax cuts to those with incomes over $200,000 a year. We disagree."
Sen. Paul Simon (D–Ill.) wants new taxes to pay for the war. He told a Capitol Hill hearing, "It is not right to expect the only people to sacrifice to be the troops in Saudi Arabia and their families. "In a Wall Street Journal column, Harvard's Robert Reich called for a 40-percent income tax on people earning more than $100,000 a year, to pay for the war.
On the "MacNeil/Lehrer News Hour," Julianne Malveaux, a U.C.-Berkeley economist, contended that the war costs nearly $1 billion a day. "Six months of war would mean $180 billion," she said. "It would double our deficit!" She called for windfall profits taxes on oil companies and higher taxes on the rich.
The leaders of this campaign portray a war tax as a fiscally responsible measure. The country is $3 trillion in debt, they say. Why add red ink?
These critics misstate the economic costs of the war and responsible measures to deal with them. On the same "MacNeil/Lehrer" segment, Charles Schultze of the Brookings Institution pointed out that much of the war's economic costs had been paid long before the shooting started. Patriot missiles and artillery shells were purchased as long as two decades ago; members of the standing army would get their salaries whether or not they were in the gulf.
Schultze also noted that the military rearmed itself in the 1980s to respond to the Soviet threat. If the Evil Empire no longer expands, we can spend several years restocking our armories. We won't replace weapons that use outdated technology. And with the country in recession, a tax increase would further depress the economy and burden social-insurance programs. Writing in the Los Angeles Times, Laura D'Andrea Tyson, another Berkeley economist and hardly a conservative, agrees. "It is a foolish policy," she says, "to make ourselves poorer to balance the budget."
Rep. Dick Armey (R–Tex.) offers a better way to pay for the war: Cut other government spending. Armey says the time is right to cut subsidies to rich farmers and slash other wasteful programs. Schultze agrees, noting that the nation doesn't have to be at war for the government to cut unnecessary spending.
And gratuitous rich bashing won't shrink the deficit. The vaunted luxury tax enacted last summer will bring in less than $1.5 billion over the next five years; it may cost the IRS more than that to collect it. If income tax rates go up, wealthy Americans will simply shelter their riches in tax-free havens. And greater tax revenue will simply encourage more spending by the money-hungry in Washington.
George Bush shares the blame for this fiscal-policy muddle. By abandoning Gramm-Rudman-Hollings and the threat of sequestration, his proposed 1992 budget will add $700 billion to the national debt over the next three years. Since neither Congress nor the administration will meaningfully cut spending, as debt mounts, both sides will see higher taxes as the only response.
The war in the gulf will have enormous economic, political, and human costs. But the greedy spenders waging their domestic war seem annoyed that Saddam Hussein would sidetrack their campaign. Even after the shooting ends overseas, tax cutters at home will need to keep their powder dry.