Dick
Morris...
Danger: Tax Trigger
Ahead
Published on TheHill.com on May 4, 2011
A diabolical plot is being hatched between Senate Democrats, the White
House and three Republican accomplices -- Tom Coburn (Okla.), Mike
Crapo (Idaho) and Saxby Chambliss (Ga.). The concept is to enact an
amendment to the debt-limit extension specifying certain targets for
deficit reduction and then mandating automatic spending cuts AND tax
increases to take effect if the goals are not met.
This formula permits backdoor tax increases on which nobody votes and
no fingerprints appear. The taxes just happen automatically -- the
immaculate conception tax increase. The plan will vindicate Obama’s
long-term goal: to expand the size of the government’s share of the
economy.
When he took office, federal, state and local spending accounted for 35
percent of GDP. Now it equals 44 percent. But as long as the extra
spending is borrowed, it is not permanent. So Obama’s goal has been to
lock in the higher level of spending by matching it with higher taxes.
But even the Democrats are smart enough never to vote for tax increases
on the general public and, only with some hesitation, to impose them on
the wealthy. Now, with the automatic trigger, they and their Republican
allies can vote for higher taxes while seeming only to be supporting
deficit reduction. When the taxes come as a result of the automatic
trigger they enacted, they can blame future Congresses for not agreeing
to the spending cuts. They can even rail against the tax increases. It
won’t matter. The tax hikes will take place automatically.
Of course, what one Congress mandates, another can repeal. But the
mechanism of passing a law to block the tax increases is far more
difficult. You would need 60 votes in the Senate and control of the
House and the presidency -- a tall and probably impossible order for
future anti-tax Republicans. So the politicians can have it both ways
-- they can oppose tax increases and watch them take effect without
their fingerprints on them.
So the game plan is for the debt-limit extension to stall in the House
and for the bipartisan group of six senators to swoop in with their
legislation to save the day. It will seem, to all appearances, that
they will have mandated deficit reduction as the price for a debt-limit
hike. So far, so good. But the tax trigger will be part of the package,
and we will have stripped Congress of the power to tax and delegated it
to an automatic trigger.
The crucial actors in this sham are the three Republicans who are part
of the six-member “bipartisan” group that is cooking up the idea for
the automatic trigger. Without the political cover Coburn, Chambliss
and Crapo afford, the Democrats would never be able to push so
audacious a plan. But Coburn has a sterling reputation as a fiscal
conservative, as does Chambliss. All three Republican senators were
just reelected (without breathing a word of their true intentions to
their constituents). It is vital that all Republicans let these three
senators know what we think of their plan for automatic tax increases.
Of course, once the trigger is enacted, the spending cuts won’t happen
as promised. Even if they are enacted, the experience with previous
spending-cut/tax-increase deals is that the taxes happen but the cuts
don’t. Even if the spending reductions are actually enacted, they will
likely be vitiated by the impact of tax increases on the economy. The
taxes will drive down what economic growth remains, depressing
government revenues and driving up entitlement safety-net spending. As
a result, the deficit-reduction targets won’t be reached and even more
tax increases will have to be triggered. A vicious cycle akin to that
which has ruined cities like Detroit will set in.
The Gramm-Rudman Act of the ‘80s imposed similar automatic provisions
if deficit-reduction targets are not met, but these triggers mandated
spending cuts, not tax increases. Even so, the Supreme Court ruled that
the legislation was an unconstitutional delegation of Congress’s power
to tax. Likely this deal is as well. But we must head it off before it
gets on the statute books.
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