I subscribe to The Kiplinger Letter because I enjoy its insights on trends in business, government, politics and the economy. I was delighted to see this prediction in the issue dated June 29:
The no-tax-hike pledge is the brainchild of Grover Norquist, founder of Americans for Tax Reform. According to ATR’s website, 238 of 242 House Republicans and 41 out of 47 Senate Republicans in the 112th session of Congress had signed ATR’s “Taxpayer Protection Pledge”, in which the pledger promises to “oppose any and all efforts to increase the marginal income tax rate for individuals and business; and to oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”
The pledge has the effect of putting Congress on a leash. Whenever talk comes up of using taxes to help put our economic house in order, Norquist jerks the leash, and 279 House and Senate members start howling. What nonsense!
I fully recognize that America’s balance sheet and income and expense statement are messy. Furthermore, I agree that we have to cut back on government spending to be fiscally responsible.
But here’s the thing: If you were running a business, you’d never commit to a strategy of no price hikes. You might avoid price increases as much as possible. You might use productivity increases and cost-cutting as your primary strategies to stay competitive and profitable. But you’d never say, categorically, that you would never raise prices. It would be unwise to rob yourself of what might someday be a necessary tool.
I understand the federal government isn’t in the business of making a profit. I understand it can do a better job of managing its resources. I understand it should not take more resources than necessary to do the job it is asked to do. But to ask the federal government to never raise taxes again is to strip it of a tool it might need in crises and emergencies or to deliver the goods and services that we . . . we the people . . . demand.
We are, after all, the beneficiaries of many government programs, such as the $780 billion being spent on Social Security, the $485 billion spent on Medicare and the $270 billion spent on Medicaid. Are you willing to see cuts in those programs so there can be no new taxes? How about the $900 billion spent on defense? Are you willing to see cuts in that budget? (I am.)
I’m glad to see politicians turning their backs on this pledge. The only pledge they should ever take is their oath of office. This wording was enacted into law in 1884, and it’s as good now as it was then:
“I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.”
So, what do you think? Is it wise for an elected official to take the no-tax-hike pledge, thereby abandoning a strategic tool he or she might need someday? If you ask me, I think it’s a bad approach to government.