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

African States Push to Keep Boko Haram Offline

Central African telecoms ministers working with Nigeria to block all videos posted by Boko Haram in effort to blunt Nigerian militant group's propaganda More

Falling Oil Prices, Internet-Savvy Youth Pose Challenge for Gulf Monarchies

Across the Gulf, younger generations are putting a strain on traditional politics More

Philippines Call Center Workers Face Challenges

Country has world’s largest business process outsourcing, or BPO, industry, employing some one-million workers 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.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More