George F. Will: Defining down tax victory
Needing a victory, congressional Republicans have chosen not to emulate Shakespeare's Henry V before Agincourt. He advocated stiffening the sinews, summoning up the blood and lending the eye a terrible aspect. The Republicans would rather define victory down.
What began with a bang of promises of comprehensive tax reform will end with a whimper: The only large change will be to the national debt. Consider a small proposal: The significance of repealing the estate tax — raising about $20 billion this year, a pittance in the $3.88 trillion budget — would be philosophic rather than economic.
Desperate to propitiate impatient constituents, Republicans say this is no time (there never is a time) to fret about the national debt, which passed $20 trillion two months ago. House Speaker Paul Ryan says do not worry, “We finally have a president who is willing to actually balance the budget.” Ryan underestimates the president, who has promised to eliminate not just the budget deficit but the national debt in just eight years, without touching entitlements.
Superficial political discord distracts from this bipartisan consensus: We shall have a generous entitlement state and not pay for it. Instead, we shall offload onto future generations a substantial portion of the costs. As Nicholas Eberstadt of the American Enterprise Institute reminds, during half a century of Republican rhetoric of frugality, 1960 to 2010, entitlement spending grew 8 percent faster under Republican presidents than under Democrats.
In the ninth year of the economy's unusually long expansion, and with near full employment, the budget deficit for the past fiscal year was $666 billion, up $80 billion from the previous year. Republicans reportedly flinched from a “border adjustment tax” on imports ($1 trillion in a decade) to partially recoup revenue lost from reduced rates, and now have gone wobbly about ending the deductibility of state and local taxes ($1.3 trillion). Republicans might still be contemplating steep reductions in the amounts that individuals can put into tax-deferred 401(k) retirement accounts. This will displease approximately 32 percent of workers and worsen the inadequate savings rate of a nation where defined-benefit pension plans are now mostly luxuries for government workers, almost a majority approaching retirement have nothing saved for it and the median Social Security payment is about $16,000 a year.
Dwight Eisenhower said: “If a problem cannot be solved, enlarge it.” Republicans should have made the case for large reforms that annoy democratically — almost everyone, simultaneously — but for a large purpose: a revenue system that stops subordinating economic efficiency to social engineering and rent-seeking, thereby maximizing the probability of growth sufficient to fund the entitlement state. That requires a bold argument — for a consumption tax or a carbon tax or a zero corporate tax rate or anything for which public-spirited people might stiffen their sinews and summon up their blood.
George F. Will is a columnist for Newsweek and The Washington Post.