News / USA

Tax Hikes Were Once Common in US Deficit-Cutting

The Capitol is seen in Washington, DC, July 7, 2011 (file photo)
The Capitol is seen in Washington, DC, July 7, 2011 (file photo)
Michael Bowman

In U.S. debt negotiations, whether to raise taxes has been a major stumbling block to a far-reaching deficit reduction plan and an increase in the federal borrowing limit. Most Republicans reject President Barack Obama’s call for a mix of spending cuts and higher taxes to improve government finances. But tax hikes were a common element of deficit-cutting plans of past decades, including one notable bill signed into law by a Republican president.

In assessing America’s fiscal woes, Republicans, like Senator Jon Kyl of Arizona, point out that federal spending is at an all-time high.

“Our problem is not that we are taxed too little. Our problem is we are spending way too much,” he said.

Democrats counter that tax revenues as a percentage of economic output are at their lowest level since the 1950s. But Republicans argue that raising taxes would enable the government to spend even more, instead of reducing the $1.5 trillion federal deficit. Senator John Cornyn of Texas, said, “I fear that so much of what we are hearing about tax increases is just to allow the spending binge to continue, and Washington will not change its ways.”

Trust factor lacking

In addition to a budget deficit, Washington appears to be hobbled by a deficit of trust. Like most Republicans, Representative Jim Jordan of Ohio does not believe Democrats will follow through on promised spending cuts.

“We are not falling for that game anymore. We are not going to let you promise spending cuts later to raise taxes now,” said Jordan.

Painting Democrats as spendthrifts is not new. In 1990, many Republican lawmakers blasted a plan to trim the federal deficit by hundreds of billions of dollars by cutting three dollars in spending for every one dollar in higher taxes. Then-Representative Gerald Solomon of New York predicted the spending cuts would never materialize.

“We are going to submit the second-largest tax increase in the history of this country with no enforcement that this Congress is going to give any spending cuts at all,” Solomon said.

Pledge comes back to haunt

Back then, as now, many Republicans had vowed to oppose any and all tax increases. The most famous pledge came from then-Vice President George H. W. Bush at the 1988 Republican National Convention.

“Read my lips: no new taxes,” Bush said. He went on to win the presidential election that year.

In 1990, the ranking Republican on the House Budget Committee was Congressman Bill Frenzel. Frenzel said Republicans hated breaking the no-tax pledge.

“The worst part was for President Bush himself. He made the pledge honestly, would like to have lived up to it, agonized over it," said Frenzel. "In the end [Bush] said, ‘I cannot run the country with that pledge hanging over my head. I am going to have to make a deal with the Democrats’.”

US Debt

1990 tax deal re-examined

The 1990 deal boosted the top income tax rate and raised the tax limit for Medicare. Today, not even Democrats believe a stand-alone tax hike is politically viable. The most Republicans have offered is an elimination of certain tax exemptions in return for an overall lowering of tax rates.

President George H. W. Bush would lose his reelection bid in 1992. To this day, according to Frenzel, Republicans blame the loss on the president’s violation of his no-tax pledge - and point to it as a warning for anyone in their ranks who would consider compromising with Democrats to boost federal revenue.

Yet budget analysts view the 1990 deal as a success. America’s finances dramatically improved during the 1990s, generating surpluses by the end of the decade. Frenzel now co-chairs the nonpartisan Committee for a Responsible Federal Budget. He said, contrary to Republican fears about the federal government’s ability to limit spending, budget caps have worked in the past and can work again.

“It was the Budget Enforcement Act of 1990 that really was the basis for the four years in the black [surpluses] in the Clinton administration.”

Under President Bill Clinton, taxes on the wealthy rose even further. The U.S. economy recorded the highest growth rates of the post-World War II era.

Obama has urged a mix of spending cuts and tax increases to slow the growth of the national debt. The three-to-one ratio advocated by the administration would mirror the 1990 budget deal. But while America’s fiscal woes are arguably more severe now than they were in 1990, Republican resistance to stand-alone tax hikes appears greater today than ever before.

You May Like

Beloved Lion Killing Sparks Virtual, Real Life Outrage

Twitter, as usual, was epicenter for anger directed at Palmer, with some questioning his manhood, calling for him to be released into the wild More

Video Booming London Property Market a Haven for Dirty Money

Billions of dollars from proceeds of crime, especially from Russia, being laundered through London property market, according to anti-corruption activists More

Video Scouts' Decision on Gays Meets Acceptance in Founder's Hometown

One former Scout leader thinks organization will move past political, social debate, get back to its primary focus of turning boys into good citizens More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Booming London Property a ‘Haven for Dirty Money’i
X
July 29, 2015 9:34 PM
Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Scouts' Decision on Gays Meets Acceptance in Founder's Hometown

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.
Video

Video 'Metal Muscles' Flex a New Bionic Hand

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.
Video

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video 'Positive Atmosphere' Points Toward TPP Trade Deal in Hawaii

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.
Video

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.
Video

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.
Video

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.
Video

Video Racially Diverse Spider-Man Takes Center Stage

Whether it’s in a comic book or on the big screen, fans have always known the man behind the Spider-Man mask as Peter Parker. But that is changing, at least in the comic book world. Marvel Comics announced that a character called Miles Morales will replace Peter Parker as Spider-Man in a new comic book series. He is half Latino, half African American, and he is quite popular among comic book fans. Correspondent Elizabeth Lee reports from Los Angeles.
Video

Video Historic Symbol Is Theme of Vibrant New Show

A new exhibit in Washington is paying tribute to the American flag with a wide and eclectic selection of artwork that uses the historic symbol as its central theme. VOA’s Julie Taboh was at the DC Chamber of Commerce for the show’s opening.

VOA Blogs