Congressman David Obey (D-Wis.), the powerful chairman of the House Appropriations Committee and an opponent of President Barack Obamas Afghan War escalation, recently proposed a special temporary income surtax to fund the war. Although his intentions are good, this proposal should be rejected.
Obeys proposal is inconvenient for proponents of the escalationmost prominently, the president and Republicans. In Washington, when advocating a new policy, proponents, like a salesperson whos trying to sell you a big-ticket item, like to bury, hide, or avoid talking about the cost. This behavior occurs because the sticker shock can sometimes be too great.
Rather than being delusional that politicians will not be politicians and that his proposal would actually pass, Obey is merely needling the war hawks to own up to how much their deepening quagmire will cost. Obey notes that if the president is asking taxpayers to pay the costs of an expensive revamp of the health care system, why not ask them to face up to the costs of the war, instead of adding to the already yawning $1 trillion annual federal budget deficit? Obey estimates that the Afghan War will cost about the same over the next decade as the Houses version of the health care bill$900 billion.
Of the several ways to fund a war, surprisingly, increased taxation is one of the least pernicious. It at least provides transparent information to the taxpayer about how much the war is costing. The taxpayer, if he or she is inclined, can then complain about it. Thats why politicians hate this option and why Obey and other liberal Democratic escalation opponents, normally not known for being fiscal hawks, are proposing it.
Other ways to fund a war are even worse. Borrowing moneythus adding to the already massive budget deficitfoists the interest costs on future generations and causes a crowding-out by government borrowing of legitimate private borrowing.
Finally, the worst option is for the government to run the presses and print money. Wars tend to cause inflation, and printing money makes things worse. Borrowing and printing money are ways of hiding the costs to the taxpayer, which is why presidential administrations and Congresses like to use them rather than very obviously raising taxes.
Of course, the most intelligent way to fund the war would be to cut other government spending. This option is usually a no go zone for politicians, because one or more powerful special interests would make a fuss over their program getting cut or eliminated. It is funny how armchair patriotism on the home front often evaporates when personal sacrifice is afoot.
For example, in the unlikely event that changing the health care system is scrapped in a patriotic frenzy to fund the Afghan escalation, the increased taxes on Cadillac health care plans or wealthy people would finance the quagmire instead of providing health insurance for those who dont have it. But at least the taxpayer would be funding only one government boondoggle instead of two. On the other hand, of Obamas two pet projects, at least a health care revamp doesnt kill anyone directly.
If the politicians really got inspired, they would scrap both expensive efforts entirely. Scrapping further government intervention in the health care system would please the Republicans, and scrapping the escalation would put a smile on the face of liberal Democrats. Why doesnt Congress use this reverse logrolling more often? Because all special interests, who by their nature like to spend other peoples money, would be disappointed.
If the politicians got downright courageous, they would cancel the Afghan escalation and further government meddling in health care, end both the unnecessary wars in Afghanistan and Iraq rapidly, and deregulate health care markets so that an efficient national market was created. Now theres an intelligent plan that has absolutely no chance of passing!
|Ivan Eland is Senior Fellow and Director of the Center on Peace & Liberty at The Independent Institute. Dr. Eland is a graduate of Iowa State University and received an M.B.A. in applied economics and Ph.D. in national security policy from George Washington University. He has been Director of Defense Policy Studies at the Cato Institute, and he spent 15 years working for Congress on national security issues, including stints as an investigator for the House Foreign Affairs Committee and Principal Defense Analyst at the Congressional Budget Office. He is author of the books Partitioning for Peace: An Exit Strategy for Iraq, and Recarving Rushmore.|