In The Tyranny of Dead Ideas, published last year, Matt Miller laid out some of the ways we're constrained by ideas that are supposedly "common wisdom" among ass-backwards fools like Congressman Jeff Flake, an ideologue as wedded to his outmoded, outdated and totally wrong philosophy as Fidel Castro is to his.
Chapter 4 of the book relates to nutjob Jeff Flake's bête noire: taxes. It's titled with the Flakean fallacy, "Taxes Hurt the Economy (And They're Always Too High)." It begins with an explanation of Wagner's Law:
In 1883, Adolf Wagner, a combative forty-eight-year-old German economist, was puzzling over the way modern societies evolved. It had been two years since Otto von Bismarck had persuaded the emperor William I to send an extraordinary message to parliament that by decade's end would lead to the creation of the first modern system of social security. "The healing of social wrongs must be sought...by positively advancing the well-being of the workers," William wrote, with uncharacteristic empathy. "Those who are disabled from work by age and invalidity have a well-grounded claim to care from the state." Bismarck, as canny and brutal a statesman as existed in the nineteenth century, was hardly a softheaded liberal, but he came under vicious attack from the right for promoting such left-wing ideas. "Call it socialism or anything you like," Bismarck sputtered at his critics, who didn't grasp his plan to blunt the more radical agenda of Karl Marx and Friedrich Engels. "It is all the same to me."
The whole controversy got Wagner thinking. As people grew more affluent, he reasoned, they'd want more of what only government could provide—a strong military, public order, good schools, and assorted welfare benefits, services that private citizens would have trouble arranging for on their own. As a result of these desires, Wagner predicted, the development of an industrial economy would be accompanied by an increased share of public expenditure in gross national product. This simple insight, known as Wagner's Law to economists today, explains much that we've observed in the century or so since. Industrial nations have much higher taxes, measured as a percentage of their economy, than do poorer nations, and similarly they have higher spending on health care, schools, pensions, police, and so forth. As it turns out, no one sent the memo about Wagner's Law to the modern Republican Party. Which is roughly how a Reagan foot soldier named Bruce Bartlett came to be excommunicated from the conservative movement in 2003.
In the fall of that year, Bartlett was stumped. A former economic aide in the Reagan White House and a Treasury official under George H. W. Bush, Bartlett was a libertarian, small-government think tank scholar who had watched with amusement as the debate raged over adding a prescription drug benefit to Medicare. He presumed that President George W. Bush's support for the bill was insincere; the sausage the Republican Congress was cooking up would be such an unprecedented budget-buster, costing trillions in the decades ahead, that Bush had to be playing his part in a classic Washington minuet. Everyone knew the drill: the Senate and House would pass different versions of the measure that couldn't possibly be reconciled; the drug bill would thus die an unavoidable but "regretted" death; all sides would claim credit for having supported fresh aid for America's seniors; they'd return to fight the good fight another day. This had to be what was going on, Bartlett reckoned, because the White House was sending signals that it would sign any bill that passed. No president could be that fiscally reckless, Bartlett knew.
But President Bush, who wanted to be reelected in 2004, saw things differently. Bush knew in his political gut that Adolf Wagner was right, and that the moment had come to give struggling seniors the public help they sought for costly medicines. "I suddenly realized, this wasn't a game at all," Bartlett recalls. "They wanted to get this thing passed and they didn't care what was in it. It was like a cold slap in the face." Like many conservatives, Bartlett was outraged when the president signed the pricey new benefit into law. Then, like any good policy wonk, he sat down to think through what it all meant.
The government already faced about $40 trillion in unfunded liabilities for programs such as Social Security and Medicare. Bush and the Republican Party had just put their imprimatur on trillions more. Bartlett's conclusion was merely mathematical. "We cannot avoid a massive tax increase sometime in the near future," he recalls realizing. For a Republican to think such a thought was bad enough. Then Bartlett committed his real crime. He began laying out this thinking in public, first in his syndicated column and then in magazine articles. Bartlett argued that it was now clear beyond disputing that the Republican Party, despite its rhetoric, would never slow spending growth: after all, it had just enacted the biggest new health care entitlement since the 1960s, even as it balked at cutting a few billion dollars from the next trillion in planned Medicaid spending for the poor. Since tax increases would therefore be necessary before long to avoid untenable and debilitating deficits, the country needed to think about how to raise new revenue in ways that would be least distorting for the economy. To Bartlett, that meant it was time for an American version of the national sales tax favored by many European governments: a value added tax, or VAT.
Conservative Washington went berserk. Bartlett was summoned to a meeting at the Heritage Foundation, where several right-wing analysts castigated him for his heresy. Why are you endorsing tax increases, they demanded to know. To Bartlett the accusation was surreal. I'm not endorsing tax increases, he replied; I'm forecasting them. You know the facts as well as I do. "They simply refused to accept those realities," Bartlett recalls. "They refused to confront the numbers as they exist." Before long, Bartlett became persona non grata on the right, a man without a party. His banishment stood as a warning to others not to stray from the party line on taxes, no matter how detached from reality the orthodoxy became.
"I'm not in favor of higher taxes," Bartlett told me several years later, still smarting. "I'd be all in favor of slashing government so that it was not necessary. But I'm not stupid. I can see that we're not going to do that. We're not going to cut tens of trillions of dollars out of future spending from large constituencies of voters who are dependent upon these programs. It just isn't going to happen. And anybody who thinks it is, is living in a dream world."
The emphasis at the end is ours, and it means you, fanatic ideologue Jeff Flake. You don't believe in Social Security or Medicare or Medicaid. You think they're unconstitutional, "socialism," and you want to get rid of them. But you won't be able to even if there's a Republican president and an overwhelming majority of right-wing Republicans in Congress. (You can read the rest of Chapter 4 in Matt Miller's Tyranny of Dead Ideas here.) The answer's simple:
East Valley conservatives support Social Security and Medicare, as well as other vital programs like unemployment benefits and food stamps. These programs benefit the middle class, the rich and the poor alike. They are the fruits of a civilized society, and these programs will be funded, one way or another, through higher taxes.
Of course even President Obama pretends we can keep the Bush tax cuts on the non-super-rich. And he, like the right-wingers, is wrong. It's arithmetic.
By the way, the taxes we currently pay are a smaller percentage of gross domestic product than any time since I was an infant, and I'll be 60 next year. When the top marginal income taxes were at their highest, in the 1950s and 1960s -- and I can remember the prosperity -- Americans' incomes and standards of living rose more quickly and more sustainedly than they ever have since, especially since the morons like Jeff Flake gained the power they're so loath to give up even after decades of failure.
So even though Jeff Flake will win this election -- as he has with ease every election he's ever faced -- he has to lose the war. In his case, his war against reasonable taxes might as well be the First Punic War. He's that out of touch with his times and the nation he so hates and so badly misunderstands.
