Other people's money

President Bush's proposed tax cut would wrest control from tax-and-spend Democrats and return power to the people.

Published March 5, 2001 4:01PM (EST)

An indispensable guide to the great tax debate is the 200-year-old observation by a professor named Alexander Tyler. He warned: "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on the majority always votes for the candidates promising the most money from the public treasury."

The Democratic Party is the party of this form of popular corruption. The heart of the Democratic Party and its activist core is made up of government unions, government-dependent professions (teachers, social workers, civil servants); special-interest and special-benefits groups (abortion rights is a good example) that feed off the government trough; and ethnic constituencies, African-Americans being the most prominent, that are disproportionately invested in government jobs and in programs that government provides. The Democratic Party credo is "take as much of the people's money as politically feasible, and use that money to buy as many of the people's votes as possible."

Tax cuts are a threat to this Democratic agenda. Consequently, Democrats loathe and despise them. During the 1992 campaign, Bill Clinton and Al Gore did propose a "tax cut for the middle class" -- a constituency they coveted. But once they were elected, they immediately reneged on the promise. In their first budget in 1993 they engineered the largest tax increase in American history with Gore, as vice president, casting the deciding Senate vote. Nor did they once support Republican-proposed tax cuts during the rest of their years in power.

The only reason a tax cut is on the table today, in the first flush of the new Bush administration, is because Alexander Tyler was overly cynical and unduly pessimistic. Over the last several decades, a party has arisen in American politics that is anti-big government and that, despite tacks and retreats, is committed to an agenda of reducing government's ability to reach into the peoples' pockets in pursuit of its insatiable greed. The modern Republican Party is the creation of Ronald Reagan, who dramatically reduced marginal tax rates in 1982, and Newt Gingrich, whose 1994 "Contract with America" imposed balanced budgets over determined Democratic resistance. (The balanced budget did have a crucial assist from the Master Opportunist, who in 1996 triangulated across party lines to save himself from electoral defeat, and who brought some of his party along with him.)

The adoption of a balanced budget in the context of a booming economy produced the gigantic government surpluses that have forced the question: What are we going to do with these trillion-dollar overcharges on American taxpayers? The Republican answer is: Return the money to the people who paid it. The Democratic answer: Don't.

Al Gore's proposal for "targeted tax cuts" during the 2000 presidential campaign was a concession to political reality perfectly reflecting the Democrats' dedication to the corruption of the popular will. Gore's plan targeted voting constituencies that the Democrats coveted (e.g., tax credits for the middle class for college tuition), and rewarded those who adopted their political preferences (purchasers of environmentally friendly automobiles, for example). In contrast, his Republican opponent, George W. Bush, promised an across-the-board tax refund that would "return the money to those who paid it." Bush proposed returning more than three times the tax overcharge that Gore was willing to part with.

Now President Bush is attempting to make good on his campaign promise with a $1.6 trillion tax relief. And the Democrats are still trying to stop him. The president's tax refund, they say, is a plan to "give" every rich person a Lexus, and every poor person a kick when they're down. It is a massive "redistribution of wealth to the wealthy." It is a "tax break for the rich." But these are all demagogic lies. When you return money, you do not "give" it or "redistribute" it. You return it. It's that simple.

For almost 70 years, the Democratic Party has shaped and controlled the federal tax code. As a result of its efforts, the bottom 50 percent of income earners today pay virtually no taxes, while the top 50 percent pay all of them, and the top 1 percent pay one quarter of them. This means that any fair refund of overpaid taxes will go mainly to the top 50 percent and top 1 percent. In other words, the Democrats have designed the tax code so that any time any government wants to do the right thing and return the money it has overcharged the taxpayer, the Democrats will be able to appeal to the majority of the population with this lie: It's a tax break for the rich on the backs of the poor; it's a giveaway to those who have at the expense of those who don't.

In fact, no person in the top 1 percent needs a tax refund to buy a Lexus, as Tom Daschle, D-S.D., and Richard Gephardt, D-Mo., so maliciously suggest. Tax refunds have no impact whatsoever on the personal lives of the rich. None. No rich person needs a tax refund to send his child to private school. No rich person will have to cancel a vacation if he doesn't get a tax refund. Think about it. He's rich! What the tax refund affects is his investment portfolio. In other words, tax money returned will be invested in the creation of jobs and opportunities for everyone. Returning investment money to people who have a record of productive investment (that's why they're rich) is good social policy. It's helpful to all working Americans.

What it's not helpful to is the Democrats' agenda of using some people's money to buy other people's votes. To accomplish this end, Democrats want to ensure that government keeps as much of the tax stream as possible. The best way to do this is to 1) not reduce the budget ever; and 2) have no tax refund at all. In the present political climate, voters won't go along with no tax refund at all. The surplus -- i.e., the overcharge -- is just too large, the suspicion of politicians and the fear of government waste too high. So the next best step is to argue for paying down the national debt. Some pay-down is probably warranted, but if government pays down the debt while the tax base stays the same, the coveted income stream for government projects will be preserved. That's why this kind of "fiscal conservatism" has appeal to Democrats. It preserves their power base. Meanwhile, the present tax refund can be demagogued as "tax giveaways to the wealthy at the expense of the poor" (two lies in one).

The mission of the modern Republican Party is to give power back to the people. That is the real meaning of welfare reform, of bloc grants to the states, of repealing federal mandates and of Bush's new Social Security savings accounts plan, which would place trillions of dollars now under government control back into the hands of individuals. I remember attending a charter meeting of Newt Gingrich's GOPAC organization in Washington in 1995 to celebrate the "Contract With America." Gingrich was on the podium saying that the contract was just the beginning; that devolving power to the states by ending federal mandates was just one step. Now, he said, we are going to devolve power back to the municipalities, and then to the communities and then to individuals. That is our plan. At this point, somebody in the audience stood up and shouted "power to the people." Except for the dinner ties and the elegant setting, I could have sworn I was back in Berkeley in the '60s again.

President Bush's compassionate conservatism is the latest phase of this battle against the Tylerites -- against the grasping appetite for government power on the part of a self-aggrandizing and self-absorbed political elite. To really understand Democrats, you have to understand that they consider other people's taxes to be their charity. It is the delusion of self-righteous busybodies. The so-called "charity" work of government has been an epic human disaster. Trillions squandered on welfare without a dent in the numbers of the poor. Trillions squandered on programs that destroyed inner-city families, and locked millions of poor people into lifetime dependency and the Democratic Party. Trillions that financed social workers, bureaucrats and corporate suppliers at the expense of the very people the programs were alleged to help. Opponents of the Bush tax plan point to the fact that 40 percent of African-American children live in poverty. What they don't point out is that 85 percent of those children have no fathers -- thanks in large part to the anti-family incentives of the welfare system itself.

That is the menace of government good intentions, and it is a prime inspiration for the tax refund proposed by President Bush that would return power to individuals and that every individual -- wealthy or poor -- should support.

By David Horowitz

David Horowitz is a conservative writer and activist.

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