Not A Penny More: Why Democrats Were Stunned By The Anti-Tax Revolution

I’ve been anxiously checking the City Journal site daily, eagerly waiting for William Voegeli’s advertised opus on “anti-tax absolutism” to move out of the “coming soon” section.

The piece was finally available this morning and well worth the anticipation.

Headlined “Not a Penny More,” the article admits that that anti-tax absolutism is hardly the conventional wisdom. In fact, anti-tax absolutism is considered terribly unenlightened. Voegeli cites David Brooks of the New York Times, who chided Republicans during the debt ceiling debate for rejecting “trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases.”

This established Republicans, Brooks wrote, as “fanatics” with “no sense of moral decency”—clearly “not fit to govern.” Around the same time, Eugene Robinson of the Washington Post wrote disapprovingly that for Republicans “tax cuts are not a matter of policy but of faith.”

Voegeli shows why the religion of not raising taxes is a pretty good creed for Republicans, both fiscally and politically.

Voegeli divides federal spending into three categories: national defense, welfare state, and housekeeping (the rest of what the federal government does, including federal courts, prisons, prosecutors, and the FBI; Amtrak and air-traffic control; national parks and the EPA; embassies and consulates; veterans’ programs; NASA; and so on).

You can probably guess which category has grown the most:

Here’s the scorecard. Spending on national defense, adjusted for inflation and population, was 42 percent higher in 2008 than in 1965, while housekeeping outlays were 76 percent higher (see the chart below). Both, in other words, grew far less rapidly than the economy or federal revenues—both of which, remember, were about 150 percent higher in 2008 than in 1965. But welfare-state expenditures were 583 percent higher. In fact, the welfare state became the core of the federal government, growing from 26 percent of federal outlays in 1965 to 61 percent in 2008.

Government revenues over the last 40 years have kept pace with economic growth, but spending has far outpaced either. The Democrats, writes Voegeli, exist to defend and expand the welfare state. The Democrats have said this was their project all along but they have not been honest about one aspect of it: they have always argued that economic growth would pay for this expansion. But this, as we know, is not what happened.

As Voegeli writes, Democrats, expecting everybody to fall in line and pay up when the bill came due, have been stunned by the anti-tax revolution:

After all, the Democrats were accustomed to the genteel Republicans of yore, who had always joined them in decorously avoiding the topic of how much social-welfare programs had grown in the past when deliberating how much they should grow in the future. Back then, both sides implicitly accepted a baseline rising steadily and eternally; negotiations were merely about how quickly it should rise….

When Democrats conduct that fight [for higher taxes] by calling Republicans nihilists, they really seem to believe that the alternative to higher taxes is the end of civilization as we know it.

But Republicans should not raise taxes:

When they refuse to raise taxes, Republicans force Democrats to make a deeply unpersuasive argument. Major expansions of the welfare state are indispensable, this argument goes; but the $5.08 trillion of federal, state, and local government outlays in 2010—35 percent of GDP—is already being spent on its very best uses; therefore, our new government endeavors will require corralling more of the 65 GDP percentage points that now roam contentedly beyond the fence.

Such a platform would be helpful for any candidate seeking the presidency—so long as it was the presidency of the American Federation of State, County, and Municipal Employees. But no Democratic politician will ever use it successfully to win over a large, diverse electorate residing outside our blue ghettos, which is why Democratic presidential candidates avoid it and instead promise not to raise taxes. This silence is a deafening testament to Democrats’ morose conviction that Americans don’t like their party’s agenda enough to give it the only endorsement that really matters: voting to pay for it. It’s hard to see what incentive Republicans have to extricate Democrats from this dilemma.

Let's hope that all the GOP hopefuls will get religion.