The Republican Party may be the majority political party, in control of Congress and the vast majority of state governorships. But U.S. President Bill Clinton controls U.S.’ political agenda.
Clinton wants to increase taxes (81 different, small hikes), create a panoply of new social programs (additional spending would run to nearly $5 trillion over the next 15 years) and get the government involved in the stock market (Uncle Sam would eventually become the nation’s biggest investor via Social Security). This is impressive stuff from someone who was only recently impeached.
The GOP originally came out swinging: Smaller government, individual retirement accounts and across-the-board tax cuts were all on the agenda. The program was even popular. A Rasmussen Research poll found that 68 percent of people supported a 10 percent across-the-board cut. Only 18 percent were against.
However, governments the world over, from Germany to Japan, have resisted pressure to cut social programs and tax rates. In the same way, Republican legislators started promoting their favorite programs, the ones they wanted to spend more on. They agreed to fence off most of the surplus to “save” Social Security, making it more difficult to enact fundamental reform.
And now members are backing away from tax cuts. After a recent House Republican retreat, Rep. Christopher Shays of Connecticut opined, “I think the president is hoping we’ll make tax cuts our mantra and walk into that trap. But we’re not going to make that mistake.”
What mistake? The president told one audience after his State of the Union address: “We could give (the surplus) all back to you and hope you spend it right.” But, he added, they couldn’t be trusted. Republicans should simply take the other side of the issue. Whose money is it, anyway? It’s time people were allowed to spend more of their own money.
Not all members of the GOP are ready to give up pushing for a tax cut. But it can’t be too large, worries even a conservative stalwart like Republican Rep. Joe Scarborough of Florida. Too large?
The projected surplus over the next decade is $2.4 trillion — an incredible $27,000 per household. Accepting the president’s 62 percent allocation to shore up Social Security would still leave more than $900 billion for tax cuts. But Republicans could save Social Security by eliminating those wasteful programs they used to inveigh against and giving even more money back to the people who earned it.
Other Republicans want tax cuts, but not for all Americans. Instead, they are proposing to fix tax “inequities.” The greatest inequity, however, is the increasing burden on everyone.
For this the GOP is partly to blame. For instance, the ludicrous bit of social engineering known as the 1997 tax bill increased the marginal rate, the complexity of the tax code and the total take from many people. These higher taxes funded a boost in welfare (refundable child tax credits for people who don’t pay any income tax).
The answer is an across-the-board cut. But, complains Republican Rep. Nancy Johnson of Connecticut, that “tends to help the top earners the most.”
Yet such a tax cut simply benefits people in proportion to what they now pay. The latest Internal Revenue Service data (for 1996) show that the top 1 percent of people currently pays 32.3 percent of all income taxes, up from 25 percent a decade before. The top 5 percent pay more than half; the top 10 percent nearly two-thirds; and the top 25 percent more than four of every five dollars. Don’t these people deserve a little tax relief?
At a time when tax revenues and budget surpluses are surging, Republicans should offer a simple message: The tax burden is too high. The Tax Foundation figures that Tax Freedom Day, the day of the year when Americans effectively start working for themselves, was May 10 in 1998, a week later than just four years before. In high tax states, Tax Freedom Day ran as late as May 26.
The peacetime federal tax burden is now the heaviest it’s ever been. Washington’s receipts as a share of GDP are only a fraction lower than they were in 1944, at the height of the world’s worst war. Americans are turning more of their income over to government at all levels than ever before.
While free-spending legislators may think this is fine, the public does not. One 1995 poll found that two-thirds of Americans believed they were paying too much; the median estimate of the highest percentage a family should have to pay was 25 percent. In contrast, the average rate today is 35.4 percent. Interestingly, pollster Everett Ladd says “America is probably the only country . . . where there are no significant differences by party or class (concerning) the ‘ideal,’ fair tax.”
If the GOP is unwilling to take up the cause of taxpayer, it will prove that it doesn’t deserve to govern, just like the former conservative ruling parties in other countries that refused to lighten their people’s tax burdens. In which case, there’s no reason to fear the prospect of the Democrats regaining control of Congress. They will already be running Congress.
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