What will a Democratic House of Representatives under Speaker Nancy Pelosi be like? The Republicans have been painting an unattractive portrait of Democrats roasting young children on a spit in the Capitol rotunda and whatnot. Hoping for a more encouraging view, I picked up “A New Direction for America,” a 31-page manifesto released to little acclaim by House Democrats in June. By all means, read it. But do me a favor and vote first.
The document is full of bromides, of course, and like all good bromides, they come in threes. The Democrats promise “security, prosperity, and opportunity” in “diverse, safe, and vibrant communities.” Not to mention “integrity, civility and fiscal discipline.” They will “protect Americans, secure our borders, and restore our country’s position of international leadership” through “homeland, energy, and diplomatic strategies.” And we’re just up to Page 3.
The two favorite words of Democrats on the cusp of power seem to be “tax credit.” They promise to “modernize” the tax credit for research and development; to “expand and improve” the already ludicrously complex system of tax-deductible retirement accounts like IRAs and 401(k)s (and “match dollar-for-dollar” the first $1,000 a person puts in); a “100% tax credit for tuition up to $3000.” They want a “broadband tax credit” for Internet access in “rural and underserved areas.”
They call for a 50 percent tax credit for employee health insurance paid for by small businesses, as their solution to the health-care crisis. Needless to say, they love the tax credit for ethanol production, and want to expand it for “local” ethanol producers. And—my favorite—they want a tax credit to cover the administrative costs of “encourag[ing] employers to offer their employees the option to convert their retirement plan into an annuity when they retire.” I don’t know what that last one is about, but I smell an interested party. It’s just not the kind of thing that anyone thinks up who doesn’t have some skin in the game.
Democrats call for ending the “Disabled Veterans Tax” and the “Military Families Tax.” The what? There cannot be any such thing as a Disabled Veterans Tax. It is a label dreamed up by people wanting special treatment, like the Republicans’ brilliant “Death Tax” for the estate tax. Maybe they deserve it, maybe they don’t. But why can’t we leave this bullying by terminology to Newt Gingrich?
The problem with tax credits in general is that they never appear in the budget, so they never get the same scrutiny as direct spending, although their impact on the deficit is exactly the same. By definition, they cost more than whatever benefit they are intended to achieve, since no one is going to be induced to spend an extra dollar on, say, dance lessons (because some member of Congress has decided that it would be good for the country if more people knew how to dance) unless the subsidy is worth more than a dollar.
Tax subsidies often go to Person X to help Person Y (e.g. to a corporation to help its employees), and Person X gets a slice of the benefit—often a big slice. And the distributional consequences are rarely examined. For example, tax credits are just one of several new subsidies the Democrats propose for college education. Why should a young person who is out working and paying taxes subsidize someone in college who will soon be better off, if he or she isn’t already?
Fairness is one of the three qualities that need to be restored to American public life after six years of George W. Bush and 12 years of French-Revolution-turned-French-farce on Capitol Hill. The other two are honesty and competence.
Honesty is not just therapeutic. Fiscal honesty is a practical necessity. “New Direction” quite rightly denounces the staggering fiscal irresponsibility of Republican leaders, and duly promises “pay as you go” spending. But in the entire document there is not one explicit revenue raiser to balance the many specific and enormous new spending programs and tax credits.
Competence, of course, brings us back to Iraq. Apparently and unfortunately, President Bush is right that the Democrats have no “plan for victory.” (Neither does he, of course. Nor, for that matter, do I. But I don’t claim to have one. And I didn’t start it.) For national security in general, the Democrats’ plan is so according-to-type that you cringe with embarrassment: It’s mostly about new cash benefits for veterans. Regarding Iraq specifically, the Democrats’ plan has two parts. First, they want Iraqis to “assum[e] primary responsibility for securing and governing their country.” Then they want “responsible redeployment” (great euphemism) of American forces.
Older readers may recognize this formula. It’s Vietnamization—the Nixon-Kissinger plan for extracting us from a previous mistake. But Vietnamization was not a plan for victory. It was a plan for what was called “peace with honor” and is now known as “defeat.”
Maybe “A New Direction for America” is just a campaign document—although it seems to have had no effect at all on the campaign. My fear is that the House Democrats may try to use it as a basis for governing.