DeM Banter: Something I have been pondering for a long time… thinking it is a tad late now and the public would balk. However, think back to Sept 12, 2001… thinking a war tax would have sold back then BIG time, might have missed the bus on that one. Several loop holes I could see the Executive Branch utilizing with the effort outlined below… might need to tighten that up a bit. Thoughts?
New York Times
February 11, 2013
WASHINGTON–NOW that Congress has discarded the idea that taxes can never be raised, we must change how we pay for the wars we ask our military to fight. We should institute a war tax.
With leading officials calling for action in Syria, and the American military providing support for France’s intervention in Mali, the need for such a tax is urgent. And President Obama’s call for tax reform as the next round of budget negotiations begins offers a perfect opportunity to enact it.
Military spending has been declining since 2009, easing the conflict between pursuing our national security interests and solving our fiscal crisis. But if we undertake new military interventions, that tension will come roaring back.
Those who look at our military spending as a percent of gross domestic product and argue that we could spend more are right. At our current level of $646 billion, we are spending roughly 4 percent of G.D.P. on national defense, well below cold war averages. The missing part of their argument is whether we can afford to pay for it now or would have to borrow, adding to the national debt. After all, war spending — like all government spending — wrecks public finances only when more money is spent than is brought in.
This simple equation is nothing new. Three years ago, the Senate Budget Committee adopted a bipartisan amendment requiring that wars be paid for. The Simpson-Bowles deficit-reduction commission and Senator Al Franken, Democrat of Minnesota, both proposed doing much the same thing. None of these proposals resolved the question of whether to pay for future wars through spending cuts or raising more revenue. Now that Congress has finally passed legislation letting taxes increase, we must make a choice and require a tax surcharge to pay for any military operation.
War traditionally has motivated major changes in tax policy. The Civil War brought the first income tax. World War I made the federal income tax permanent. World War II brought tax withholding. In 1969, at the height of the Vietnam War, the United States ran a budget surplus because of a tax surcharge Congress forced President Lyndon B. Johnson to accept.
Today’s budget negotiations offer a similar opportunity to make a surcharge permanent. President Obama called for counting as savings the money that will not be spent as the war in Afghanistan winds down. Many decried the scheme as playing with funny money because he plans to exit Afghanistan in 2014 anyway; the savings only exist because of an accounting trick in Congressional budgeting. But if those savings were associated with an actual policy change, they would start looking more real.
Since the Budget Control Act already caps military spending, there is an easy way to implement the surcharge: any spending over the caps would require it. If we felt the need to use the military and could do so under the spending caps, as the Obama administration did in 2011 responding to the earthquake in Japan and the uprising in Libya, no surcharge would be necessary. But if military action required supplemental financing, any amount over the caps would be offset with new revenue raised by an automatic surcharge on taxes.
By tying military action to additional revenue, the president would actually have a freer hand in deciding when to use force. Every argument the Obama administration makes for military action would explicitly include a call for increased taxes, forcing the question of whether the stakes in the military situation are worth the cost. If the American people agree they are worth it, the president will get both the political support and financing he needs.
Syria is the most immediate example. We now know that some top officials have argued for arming the rebels, as the secretaries of state and defense and the chairman of the Joint Chiefs of Staff did last year. Others argue for an even more robust military response, while detractors insist that we should learn from Iraq and not get involved at all.
Such decisions should not be divorced from economic considerations, but neither should we allow our finances to prevent us from pursuing vital American security interests. Putting in place a permanent tax surcharge to pay for wars would ensure that we could achieve our interests throughout the world without further worsening our finances.
If military action is worth our troops’ blood, it should be worth our treasure, too — not just in the abstract, but in the form of a specific ante by every American.
R. Russell Rumbaugh, an Army veteran and a former analyst at the Central Intelligence Agency and the Senate Budget Committee, is a senior associate at the Stimson Center, studying federal spending on military and foreign affairs.