Tax-Raising Reaganites - The American Spectator | USA News and Politics
Tax-Raising Reaganites

Echoing Bruce Bartlett, Jonathan Rauch argues in National Journal that “Real Reaganites Raise Taxes.” Since the Reagan years, Republicans have managed to keep federal tax revenues at about 18 percent of GDP while Democrats have preserved federal spending at 21 percent. This mismatch produced deficits but also gave the public the programs they liked at the price of post-Reagan tax rates. But if what Rauch calls “the 21 percent era” is over and federal spending is going to be closer to 25 percent of GDP, permanent deficits of 7 percent are unsustainable. The difference is going to have to come from taxes.

Rauch and Bartlett contend that Republicans should do the fiscally responsible thing and try to find the least destructive way possible to raise revenues for the Democrats’ spending programs. Whatever the merits of this as policy — and I frankly don’t think there is a way to finance a welfare state of the size we will soon have at an acceptable “cost to the economy and individual liberty” — it is pretty fanciful to think this would be a good arrangement for the Republicans politically. There isn’t much mileage in being the tax collectors of the welfare state, as one former House speaker might put it. 

For years, Republicans have tried to run on tax cuts while avoiding any serious cuts in government spending. There were obvious political reasons for that: cutting spending of any size is a lot less popular than cutting taxes. Worse, Republicans have failed — on the rare occasions they’ve actually tried — to reform major entitlement programs. In fact, with the Reagan-era Social Security commission “fix” and the Bush-era Medicare prescription drug benefit, they’ve tended to make the problem worse. The political risks of cutting spending that benefits the middle class are real. But the failure of the tax-cutting party to cut spending as well will impose the biggest political cost of all: It will leave the Republicans with all vinegar and no honey on fiscal policy. If they give up on keeping spending at something like its current share of GDP or less, they are going end up giving up quite a lot.

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