Budget stalemate: Why America won't raise taxes
Budget stalemate has many on Capitol Hill crunching numbers. With any new budget, taxes may be the real third rail of politics. Can the U.S. solve its fiscal woes without more revenue?
It was a secret meeting in a city that doesn't keep secrets well, so the congressional and administrative officials agreed to gather at Andrews Air Force Base in Maryland, away from the glare of the media and anyone who might leak information. Over a series of mind-numbing days, during an intense heat wave, the principals crunched numbers and jockeyed for political advantage. The goal: taming the ballooning budget deficits of the Reagan era.Skip to next paragraph
In the end, Democratic leaders in Congress and aides to President George H.W. Bush both ceded ground. Democrats would accept some cuts in entitlements, while the president would break his famous "read my lips" promise – and raise taxes. President Bush announced the plan from the Rose Garden: It would cut $119 billion from entitlements and $182 billion from discretionary programs while raising tax revenues by $134 billion, mostly through an increase in gasoline taxes.
But the package hit an unexpected roadblock. House conservatives – led by Newt Gingrich, whom Bush had believed to be an ally – revolted, joining with liberal House Democrats to block the plan. For Bush, it was "the most unpleasant, or tension filled" week of his presidency.
IN PICTURES: Why America won't raise taxes
"I hate the posturing on both sides," Bush recorded in his diary. "[People] putting their own selves ahead of the overall good."
Eventually they did pass a budget, which raised income-tax rates for the wealthy and imposed new taxes on luxury goods and tobacco. Only one-quarter of Republicans voted for it, and many remained furious with the president. Two years later, Bush would lose reelection to Bill Clinton.
It was a seminal moment in what has been a subtle but significant shift in the politics of Washington. For generations, Republicans have resisted tax increases. As far back as the 1920s, conservative Treasury Secretary Andrew Mellon was arguing that "high rates of taxation do not necessarily mean large revenue to the government, and … more revenue may actually be obtained by lower rates."
But in recent years, the aversion to taxes has become more deeply ingrained. It is more than a policy preference, more than a tenet in a party platform. For many Republican officeholders, raising taxes is a subject they simply won't broach anymore – period. If there is a third rail of politics today, it might not be Social Security. It might be tax increases.
Raising levies is not a part of the long-term budget blueprint outlined recently by Rep. Paul Ryan (R) of Wisconsin, which would cut nearly $6 trillion in spending over the next decade and transform Medicare. In fact, Mr. Ryan proposes lowering corporate and upper-income tax rates.