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A war tax doesn't make sense

Fiscal responsibility is good, but a tax hike to pay for the wars in Iraq and Afghanistan is the wrong way to go.

December 08, 2009

How could the federal government make the increasingly unpopular war in Afghanistan even less acceptable to the American people? By making it pay-as-you-go. That seems to be the thinking behind the latest effort by some congressional Democrats to create a surtax to cover the increased cost of the war. We're all for fiscal responsibility, but that doesn't seem to be the real goal of the war tax's proponents. If it were, they wouldn't be proposing something that's not just politically unfeasible but bad for the economy to boot.

The federal government has a long history of imposing special taxes or levies to pay for wars, but that precedent was ignored in the aftermath of the 9/11 terrorist attacks. President George W. Bush's annual budget proposals didn't include funding for much of the war efforts in Iraq and Afghanistan -- by 2008, Bush had borrowed more than $800 billion for the wars through "emergency" spending bills. President Obama abandoned that pretense, but he has continued to finance the wars with borrowed cash.

Obama's decision to add 30,000 troops to the forces in Afghanistan would push the U.S. deeper in the hole. Complaining that the surge would leave “no money for nothing,” Rep. David R. Obey, the liberal Wisconsin Democrat who leads the House Appropriations Committee, has called for a temporary increase in income taxes to cover the added cost. Starting in 2011, taxpayers earning less than $150,000 would pay an additional 1%; the percentage would be higher for those who earn more. It's a milder version of the surtax Obey proposed in 2007 to cover the cost of the Iraq war, which would have increased taxes 2% to 15%.

Democratic leaders nixed Obey's proposal two years ago, and they should do the same now. It's true that it is irresponsible to keep pushing the costs of the wars onto future generations, but Congress and the administration have enough income tax increases already in the pipeline. Obama has proposed allowing the Bush tax cuts for the wealthiest Americans to elapse in 2011, sending the top two brackets back up to 36% and 39.6% (they currently stand at 33% and 35%). And the House-passed healthcare reform bill would slap a 5.4% surtax on upper incomes, in addition to tax penalties on individuals and some businesses that do not obtain or provide insurance.

As much as we hope the recession will be ancient history by 2011, the economy's recovery certainly wouldn't be helped by enacting yet another tax hike. (That's not to mention the effects of the emission credits that companies might have to buy if Congress passes the Democrats' proposal for capping greenhouse gases.)

A better approach would be to pay the added costs of the war by redirecting some of the $3.7 trillion already being spent by the federal government. That's a harder task than it may seem, considering how much of the money goes to entitlements (such as Social Security, Medicare and food stamps) and debt payments. Still, taking an estimated $30 billion for the surge out of what's left wouldn't exactly leave "no money for nothing." Besides, one of Congress' jobs is to set priorities, even when times are tough.

That's a job lawmakers are loath to do. For proof, look no further than Obey's Appropriations Committee -- in the face of revenue shortfalls and crushing deficits, it approved bills that would spend 12% more on education, science and other discretionary programs (excluding foreign aid and military spending) in the current fiscal year than the last one. With much of the $787 billion in stimulus funding remaining to be spent over the next few years, appropriators can afford to do some belt-tightening to make room for the obligations we've taken on in Iraq and Afghanistan.

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