Given that the cost of government isn’t what it taxes, but what it spends, these alleged Republicans are, in essence, saying that government spending is inelastic. So, even after the outrages revealed by DOGE, government spending can’t be reduced to “pay for” eliminating the taxes on tips, Social Security and other tax reduction proposals put forth by President Trump.
Setting aside the ridiculous idea that government spending can’t be reduced, experience proves that increasing taxes to “pay for” tax cuts or other political deals never works.
As Reagan speechwriter Ken Kachigian related in a recent op-ed for the Wall Street Journal, that as Ronald Reagan’s first year in office drew to a close an article in the New York Times reported that the “Baker-Stockman axis in the White House and the Office of Management and Budget wants to mitigate . . . cuts in the income taxes by imposing new taxes in other areas.” The story referred to James Baker, Reagan’s chief of staff, and David Stockman, director of the OMB. Other Reagan aides had also proposed such taxes and leaked to at least one news outlet that if Reagan didn’t go along, they hoped the taxes would be “thrust upon the president by Congress.”
At the time President Reagan told Mr. Kachigian “Regarding tax increases, I’m not weakening a bit…,” however, his own team—and congressional leaders—were already working to persuade the president that the tax increases he would sign into law a year after his historic tax cut weren’t really increases after all. It was merely an effort to close “loopholes” in the tax code, they maintained, a “comprehensive plan” to get the deficits down.
Today, a similar dynamic is playing out in the Trump White House and Mr. Kachigian predicted the wobblers on Capitol Hill and week-knees in the White House and OMB are planning what to whisper in President Trump’s ear. They’ll warn him of “limited options;” they’ll reassure him that a “rich man’s” tax to salvage old-line programs won’t be a retreat from a promise to cut taxes—just a responsible adjustment in the tax code. They will woo him with notions of providing historic bipartisan leadership and a show of statesmanship by compromising for the national good.
Based on President Reagan’s experience, it won’t turn out that way.
Looking back, Reagan complained that the 1982 tax increase he reluctantly embraced was “among the worst decisions” of his presidency: “The fellas promised I would get $3 of spending cuts for every dollar of taxes I agreed to. Instead, for every dollar in new taxes, we got $1.70 in new spending—the complete reversal of what I was promised. That was wrong, and I shouldn’t have agreed to it.”
The good news is that President Trump has the cautionary tale of President Reagan’s tax increases to inform his decisions, and he has a different and much more ideologically aligned team at OMB and the White House to screen out bad ideas. We have a hard time believing our friends Russ Vought, Director of OMB and Stephen Miller, President Trump’s principal domestic policy advisor, would be whispering in his ear that raising taxes on anyone is a good idea.
But Washington, and especially Capitol Hill are places where bad ideas never die, so you know what to do. The Capitol Switchboard is (202-224-3121), we urge CHQ readers and friends to call their Senators and Representative TODAY to demand they cut spending and that they should pass on the idea from the Karl Marx – Bernie Sanders wing of the GOP that taxes should be raised to “pay for” keeping government spending at current levels.
- 2024 Election
- federal budget
- budget reconciliation
- tax policy
- Government spending
- DOGE
- Steve Stockman
- Reagan administration
- Russel Vought
