Gazizza.Net

Freshman House Republican Patrick McHenry of North Carolina introduced legislation last week to create a federal commission to reform government entitlement programs. But the McHenry bill has a catch that may cause budget experts on the left to start hyperventilating: It explicitly rules out any tax increases as part of the solution.

Mr. McHenry's approach directly conflicts with legislation proposed by Rep. Frank Wolf, a 13-term Republican from Virginia. Mr. Wolf specifically authorizes his own proposed bipartisan commission to consider revenue increases as part of any grand plan to avert the pending multi-trillion-dollar train wreck.

In his State of the Union message in January, President Bush called for the creation of such a commission, but left unanswered the issue of whether taxes should be "on the table." Most Democrats -- especially the economic guru of the party, former Treasury Secretary Robert Rubin -- say they will participate only if taxes are part of the solution. Mr. Rubin says he would want to start by canceling some or all of the Bush investment tax cuts. But to many Republicans, the idea of a bipartisan budget commission that leaves new taxes as an option is an all-too-familiar trap. Recall the Andrews Air Force Base "budget summit" of 1990 that led Mr. Bush's father to break his "no new taxes" pledge and lose his presidency as a consequence. Newt Gingrich, who remembers that debacle as if it were yesterday, tells me: "Bipartisan budget commissions have always been a disaster for Republicans. Democrats always want to talk about only one thing: higher taxes."

Mr. McHenry says that conservatives in the House have "no interest" in a commission that fails to rule out new taxes. "The problem with entitlements is runaway spending, so the commission I propose keeps the focus on that," he says.

A new study by Laurence Kotlikoff of Boston University calculates that if entitlement spending is not curtailed, the only way future taxpayers could accommodate all the promised Medicare and Social Security spending would be to see their "lifetime marginal net tax rates" (a measure of the tax disincentive to work) rise to between 55% and 80%. This would reverse all the gains in tax cutting starting with the Reagan tax cuts of 1981. "Taxes as a share of GDP would have to rise from 20% to perhaps 35% of GDP," says economist Larry Hunter of the Institute for Policy Innovation. "That would be economically crippling."

So the McHenry approach makes the most sense both from an economic standpoint and from the standpoint of averting the mayhem and carnage of the 1990 budget summit. Big government advocates in Washington have long argued for the need for a tax increase consensus. Buying into that idea is the fastest way for Republicans to lose their majorities in Congress.

So, basically, the Democrats will only agree to look at reining in runaway spending if they are allowed to reach even further into our pockets? Is their ever an opportunity they won't take to spend more of our money? If I were the GOP, I'd be trumpeting this all over the place between now and the elections. "Republicans want to look at controlling runaway spending that could bankrupt our nation, but the Democrats refuse to even discuss the issue unless they get to raise your taxes."