Taxes

Capital Letters: D.C. Downers

In which our man in Washington listens to the drug czar babble and learns why we can't afford tax cuts.

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Subj: The general's will
Date: 12/19/2000
From: mwlynch@reason.com

Spent a morning last Tuesday at the Heritage Foundation, listening to the outgoing drug czar, Gen. Barry R. McCaffrey. Heritage billed the speech as, "Is Our Balanced Approach to the War on Drugs Working?" McCaffrey, who prefers assertions to questions, made the title declarative: "Our Balanced Strategy Against Drugs Is Working."

Let me admit a bias of my own: Long before I spent time in Santa Fe talking with New Mexico Gov. Gary Johnson about how much fun, if arguably counterproductive, it is to get stoned, I felt the drug war's insistence on jailing people for sensory enhancement is a waste of human effort (see "America's Most Dangerous Politician," January). Still, I was surprised to find just what an idiot McCaffrey is in person.

Like drug dealers, McCaffrey targets America's youth. "The whole notion of prevention and education, aimed at getting American adolescents from the 6th grade through 12th grade, where they are reduced exposure to gateway drug taking behavior," he said in a moment of what passes for clarity. "That's the heart and soul of our national drug taking strategy."

As you can see, McCaffrey expresses his concern for youth via a strange bureaucratic speech pattern that exhibits a Bushian inability to form coherent sentences. Hence, 8th graders end up "encountering drugs in our society" and getting "wrapped up and end up in a statistically enhanced probability of being engaged in compulsive drug taking activities as young adults." Still, some of what he said reassured me. "You are statistically not going to get to age 30 and develop a cocaine habit, or start experimenting with heroin," said McCaffrey, which means I'm out of the most dangerous neck of the woods.

More worrisome was his larger world view, a perspective that is neither unique to McCaffrey nor likely to change with the new administration. The general's favorite refrain is "We're moving in the right direction," which I think he really believes. We're moving in that direction because after years of increases, drug consumption by youths appears to have leveled off. More important, to achieve this we are increasingly giving the state tremendous powers and resources. "We have billions of dollars flowing into these programs," McCaffrey said, adding without irony: "Some of them kind of creative."

It's not just insipid social programs that "vector you back to your community anti-drug coalition" that McCaffrey wants. When he became drug czar, the United States employed only 3,000 people as border guards. Today, he says we're up to 7,000. He thinks 20,000 would be a good number. He likes the increase in prisoners, too. "The Drug Enforcement Administration, backed by the CIA, the FBI, and the armed forces, are working vertical integrated crime organizations pretty effectively. That's why our federal prison population has gone up substantially, 120,000 people behind bars, two-thirds there for drug-related offenses, and there's room for more," said McCaffrey, emphasizing room for more.

"This isn't a problem to solve; it's a system to put in place," he explained. And what a system it is: On top of tens of thousands of border guards, hundreds of thousands of prisoners, and countless international anti-drug military excursions, children are propagandized in school on the dangers—some real, some make-believe—of drugs, prisoners are released under supervision for one to five years of regular drug testing, and insurance companies are forced to pay for extensive mental health and drug treatment services.

The system offers one more thing: a safe haven for politicians who, like other members of the power class, are likely to use drugs in their youth without fear of going to jail like common citizens. Asked about Bush's alleged and Clinton and Gore's acknowledged drug use, McCaffrey responded, "We went through an irresponsible period in the 1970s and 1980s, and lots of Americans used marijuana in particular, and that includes some of our leading public figures. I want to stop asking them whether they smoked a joint in 1972. Unless they've got a medical, social, or legal problem, which they should share with us, I want to get the conversation on what do you think, Mr. or Ms. Politician, ought to be our policy—and do you commit yourself by your example to supporting that policy?"

In other words, as long as politicians promise not to question whether drug use is a medical or social problem and pledge to keep it a legal problem, they're home free. Too bad that's not an offer available to the rest of us.

Subj: Tax cut time?
Date: 1/4/01
From: mwlynch@reason.com

The coming Bush-Cheney regime is dominating D.C. in every possible way, from the city's policy agenda to its fashion sense to its annoying slang. Newt Gingrich's annoying verbal tic "frankly" (a reliable sign that one was about to be lied to) has been replaced with Dick Cheney's "Big Time."

This is one conclusion I came to during a briefing sponsored by the Center on Budget and Policy Priorities at the National Press Club. The CBPP is an impressive left-of-center think tank whose mission is to construct sound arguments on why every policy put forward by a Republican is impractical, unworkable, and dangerous.

With a Bush administration on tap, the CBPP is emphasizing the fleeting nature of the surplus, so as to head off any tax cuts. Hence the title of the featured paper, written by CBPP Executive Director Robert Greenstein: "Can The New Surplus Projections Accommodate a Large Tax Cut?" Any guesses on the answer? In support of his No in thunder, Greenstein brought along William Gale, an economist at the Brookings Institution, and Robert L. Bixby, the executive director of the Concord Coalition, a green-eyeshade group that's useful when new spending programs are on the table but worse than worthless when tax cuts are imminent.

And they are imminent. Bush has shocked Washington by giving every indication that he plans to actually put forward the platform on which he campaigned. You may recall, however vaguely, that a broad-based, $1.3 trillion, 10-year tax cut was central to Bush's agenda. Liberals are at pains to make the case that America just can't afford this or any meaningful tax cut. With projected surpluses of at least $3 trillion, that's a tough, but not impossible, case. They must simply discredit the 10-year surplus estimates, which are of course wild guesses at best.

Greenstein, who was dressed in Cheney style with a blue-on-blue shirt and tie got right to it. We don't really have $3 billion coming in, you see, because of all the things the Congressional Budget Office doesn't take into account, like Congress's current spending spree.

There's also the problem of the Alternative Minimum Tax, a nifty device passed way back to ensure that fat cats pay their fair share of taxes. If it isn't adjusted and indexed for inflation, it will soon whack the daylights out of middle-class families. (Said Greenstein, "The Alternative Minimum Tax is going to invade the middle-class. Big time.") Once "realistic" adjustments are made to the CBO's totally phony numbers, the usable surplus is down to $1.5 trillion to $2 trillion.

And that's just the half of it. After a few adjustments to Bush's tax plan—the largest being a shift in the 10-year period from 2000 to 2010 to 2001 to 2011—he finds its costs have increased to $2.1 trillion. It seems the Texan has champagne tastes and a beer budget. A tax cut, intoned Greenstein, would be an "irresponsible" indiscretion.

Greenstein was the optimistic one. The Concord Coalition's Robert Bixby felt compelled to explain his group's continued existence, saying people are always asking why the organization still exists, since it was founded to fight deficits and they are long since history. "The goal was never to just balance the budget but to develop a sustainable fiscal policy," he said, before adding, "We don't want to just look at 10 years." And sustainable fiscal policies don't seem to include letting Americans keep more of their money.

For his part, Brookings' William Gale said we wouldn't even have a surplus if not for bogus government accounting methods. When he looks out 100 years, he says we're really screwed, and not because we'll all be dead and our great grandchildren will be richer than we ever were. "The surplus is a problem because it makes it difficult to impose discipline on the budget," said Gale, whose main contribution to the briefing came when he ran through the arguments likely to be used for tax cuts. He said Bush is like a realtor selling a house: It's always a good time for a tax cut. "Either a boom or bust justifies tax cuts in their eyes," he said.

We don't need tax cuts to ward off a recession, Gale said, since the money won't get to folks quickly enough to do any good. And don't even get him started on the argument that since we raised taxes to end the deficit, we should cut them to end the surplus. Those deficits were a cash-flow crisis, he said, and the surpluses are a cash-flow windfall. We need to keep the money coming in to cover the long-term structural problem, which, I gathered from his comments, is that the federal government still lets the average American keep roughly 75 percent of her income.

You think taxes need to be cut because they're at an all-time high, right? Well you're wrong! said Gale. All but super-rich Americans are paying less in taxes today than in recent history. The big money comes from those at the top, whose rates were bumped in the early '90s, and who nevertheless continued to work and earn a bunch of money.

I don't recall him offering an answer to the last argument he presented: "If the government doesn't give it back, it'll just blow the funds." Now, you'd think that a fella whose highest political value is that the federal budget be balanced for the next 100 years would be extremely concerned about Congress frittering away today's windfall on new programs (which they surely would do). Taxes, after all, can be raised easier than a program can be cut. But Gale curiously seemed far more frightened by the possibility that Americans might get to keep some of their money—er, the federal surplus.

But that's his problem. He finished on an upbeat note-upbeat for me, if not for him and his fellow presenters: "We're going to have a tax cut," he announced.

Reality—never a welcome stranger to Washington—is starting to settle in.