The Price of War
The Senate dealt America's wartime economy a blow yesterday by voting to chop President Bush's tax-cut proposal by more than half, to a maximum of $350 billion over 10 years. The excuse, at least for the TV cameras, was that America can't pay for a war and cut taxes at the same time.</br></br>We've heard some whoppers out of Washington, but this one deserves its place in history. Montana Democrat Max Baucus also made some history of his own by asserting that the U.S. has "never" cut taxes during wartime. It's "not the American way," he actually said, forgetting that America's first war more or less started over the issue of taxes. He also forgot the Cold War, which was finally won in the 1980s with a combination of Ronald Reagan's tax cut to spur the economy and defense buildup to show the Soviets they couldn't win.</br></br>It also ignores the experience of the 1960s, when JFK cut taxes and spurred a boom that helped finance war in Vietnam as well as the Great Society, at least until LBJ decided he had to "pay for" the war by passing his growth-inhibiting "surtax." This week White House spokesman Ari Fleischer cited JFK on this point, from 1962 at the height of the Cold War, and the words are worth reprinting:</br></br>"We shall, therefore, neither postpone our tax cut plans, nor cut into essential national security programs. This Administration is determined to protect America's security and survival. We are also determined to step up its economic growth. I think we must do both."</br></br>Three GOP Senators -- Lincoln Chafee of Rhode Island, Olympia Snowe of Maine and George Voinovich of Ohio -- preferred the Baucus view of history Three GOP Senators -- Lincoln Chafee of Rhode Island, Olympia Snowe of Maine and George Voinovich of Ohio -- preferred the Baucus view of history and voted with the Democrats. They can now stand up and take a bow for making the elimination of the double taxation of dividends far more difficult to achieve, if achievable at all. And if the economy fails to emerge from war as sprightly as we all hope, we'll also know whom to blame.