Democratic Leadership?

by Victor Davis Hanson

NRO’s The Corner

Not Quite the Clinton Solution

In all the talk about returning to the Clinton income-tax tables, I have been confused on one small point: As I remember the Gingrich-Clinton years, the tax raises were followed by spending freezes and caps, and some time later we had balanced budgets, however fragile and temporary.

That compromise of the 1990s now seems to be forgotten: If the Clinton tax tables led to a balanced budget, why does no one believe they will this time around? Why is there so much additional talk of the need for novel VAT taxes, healthcare surcharge taxes, and caps off income subject to FICA payroll taxes?

In other words, why is there no talk about the second half of the equation, applying an immediate, across-the-board spending freeze?

What makes the return to the Clinton tax code (if it happens and if it affects everyone equally) really unfortunate is that we are going to be taxing in an L-shaped “recovery” and yet will make little, if any, progress in balancing the books, given that borrowing is still seen as needed “stimulus” and won’t be reined in.

We can see the downward spiral; California and Greece are the models. Spending keeps rising, taxes creep up in response, deficits rise, shrill warnings about the need to cut defense, policing, and other necessary government services begin to be heard, and more taxation is passed to catch up with spending — until the next crisis.

Taxes for Thee but Not for Me

Two thoughts on the Senator Kerry embarrassment. Was it really a “judgment call”? It seems to me a pretty open-and-shut case of tax evasion, in the manner of the Timothy Geithner’s illegal write-offs and FICA avoidance. When an average taxpayer tries to avoid paying sales tax on his car or boat by the sort of machinations that Kerry employed, is the state franchise tax board (or, in some cases, the IRS) so silent?

Second, there is a disturbing pattern here: Those who are most adamant in pressing for higher taxes, rather than emphasizing spending cuts, themselves seem to be the most ready to cheat on their own taxes — think of a Dodd, Geithner, Kerry, or Rangel. That narrative of hypocrisy ties into a larger and disturbing trend: Could it be that leftist populists who rail against the unfairness of the system and activists who call for radical political and lifestyle changes are motivated by a need for psychological exemptions for their very concrete indulgences?

Surely if one were to collate what John Edwards has said about two Americas, what Al Gore has said about frivolous consumption and its effect on the environment, and Tom Friedman’s eloquent warnings about unsustainable Western lifestyles, one would never imagine the thousands of square footage in living space that each sees as essential to his own existence.

The Kerry Yacht as a Teachable Moment

By now, almost everything imaginable has been said about Senator Kerry’s docking of his new $7 million yacht in Rhode Island instead of Massachusetts, thus avoiding/postponing some $500,000 in state taxes. Here is some postmortem analysis:

1. Once again, a liberal proponent of higher and more redistributive taxes (e.g., Daschle, Geithner, Rangel) has acted antithetically to what he professes. In his 2004 campaign, Kerry alleged near-treasonous behavior (“Benedict Arnold”) on the part of companies that relocated out of the country to seek lower taxes. The psychology of this hypocrisy is hard to figure: Does the technocratic guardian class believe that, as an overseeing nomenklatura, the laws should not apply to them? Does loud support for taxes in the abstract serve as some sort of surrogate ethical compensation for avoiding them in the concrete? Or is there an assumption that such elites won’t get caught (remember, Geithner and Kerry only paid up when public attention turned to their avoidance)?

2. Economics 101 suggests that, had Massachusetts either no or very low taxes regarding yachts, it might have recaptured some of the revenue that is now Rhode Island’s.

3. Is the liberal wing of the Democratic Party now the choice of the very rich who see no dichotomy between their own enjoyment of the highest life and public remonstration against the wealthy? A pattern has certainly emerged: Yachtgate, the populist Clintons’ multi-million-dollar wedding extravaganza, John “Two Americas” Edwards’s mansion, green/live-within-our-limited-means Al Gore at home in Montecito and various other digs, and our “spread the wealth” and “redistributive change” president’s fondness for celebrity-studded banquets, golf, and exclusive vacation hideaways.

4. At some point, all the soak/attack-the-rich talk from the Obama administration (e.g., the lectures about going to the Super Bowl, the caricatures of Las Vegas, the attacks on executives and surgeons) begins to clash with all this conspicuous consumption, especially given that Obama has made a trope of “at some point you’ve made enough money” (a point that someone capable of buying a $7 million accessory has reached, perhaps). What Kerry calls a family “investment” would, in intrusive liberal orthodoxy, appear to others as an indulgence at a time when unemployment lingers near 10 percent and we are struggling to get out of recession.

5. Note how all this wealth was made: John Edwards made it summarizing personal-injury cases against doctors; Al Gore by hyping a global-warming Armageddon and then offering psychological and concrete ameliorations for it; John Kerry by marrying someone who had married someone who had inherited it. This suggests that some of the most influential of the rich Democratic elite don’t have much experience with the role of low taxes or less regulation in fostering profitable, capital-creating enterprises.

©2010 Victor Davis Hanson

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