On taxes, Ge­orge H.W. Bush may have had the last laugh

The Charlotte Observer - - Front Page - BY CHARLES LANE

Wash­ing­ton Post

As the na­tion mourns the death of former Pres­i­dent Ge­orge H.W. Bush, his 1989to-1993 term is be­ing re­called as a turn­ing point in the his­tory of the mod­ern Repub­li­can Party.

Bush’s de­ci­sion in 1990 to vi­o­late his 1988 cam­paign pledge of “no new taxes” in­fu­ri­ated the GOP base and sowed a last­ing grass­roots dis­trust of the party es­tab­lish­ment that fu­eled Newt Gin­grich’s rise to power in the House and cul­mi­nated, ar­guably, in Don­ald Trump’s 2016 in­sur­rec­tion.

Yet Bush may have lived just long enough to wit­ness the mo­ment at which tax cuts have fi­nally reached the point of di­min­ish­ing po­lit­i­cal re­turns for Repub­li­cans.

Bush’s re-elec­tion cam­paign crashed in 1992 after he de­cided to in­crease fed­eral levies, but the ca­reers of sev­eral dozen GOP mem­bers of Congress just ended in the Novem­ber midterm elec­tions after they voted to slash taxes.

The vot­ers’ ver­dict may re­flect a sea change in pub­lic pri­or­i­ties with im­pli­ca­tions for the na­tion’s long-term fis­cal predica­ment, which was badly ex­ac­er­bated by the 10-year, $1.5 tril­lion rev­enue re­duc­tion ap­proved by a GOP-con­trolled Congress and signed by Pres­i­dent Don­ald Trump in De­cem­ber 2017.

Sup­ply-side eco­nomics – roughly speak­ing, the idea that cuts to tax rates pay for them­selves in in­creased long-term growth – be­came Repub­li­can or­tho­doxy in the late 1970s and early 1980s, partly be­cause there was a su­per­fi­cial plau­si­bil­ity to it and partly be­cause it suited the Sun Belt busi­ness in­ter­ests that had at­tached them­selves to Ron­ald Rea­gan’s 1980 pres­i­den­tial cam­paign.

De­spite his move to Texas and the oil busi­ness, Bush re­mained at heart a North­east­ern Repub­li­can, a Wall Streeter’s son who sup­ported fa­vor­able tax treat­ment of cap­i­tal gains but could never quite un­der­stand how cut­ting taxes would lead to more rev­enue. “Voodoo eco­nomics,” he called it, be­fore join­ing the Rea­gan ad­min­is­tra­tion as vice pres­i­dent and get­ting with the pro­gram.

To re­as­sure skep­ti­cal Rea­gan­ites, he pledged in ac­cept­ing the party’s 1988 pres­i­den­tial nom­i­na­tion that he would tell Democrats “Read my lips” if they dared ask him for higher taxes to off­set the deficits Rea­gan’s tax cuts and de­fense spend­ing had run up.

In of­fice, though, he could not sup­press his in­stincts, reach­ing a bud­get­bal­anc­ing deal with a Demo­cratic Congress that in­volved tax in­creases. The back­lash from the right taught Bush and his fam­ily an en­dur­ing les­son, which his son Ge­orge W. Bush ap­plied as pres­i­dent after 2001, cut­ting taxes mas­sively even though the coun­try was wag­ing ex­pen­sive wars in Afghanistan and Iraq. Un­like his dad, he got re-elected.

Though most ben­e­fits of in­come-tax rate cuts in a pro­gres­sive sys­tem go to the rich, many in the mid­dle class ei­ther sup­ported or ac­qui­esced in them be­cause they also felt their taxes were too high.

Be­tween 1962 and the be­gin­ning of the 21st cen­tury, the share of the pub­lic de­scrib­ing their fed­eral in­come taxes as “too high” hov­ered con­sis­tently in the range of 60 per­cent in the Gallup Poll.

But after the Ge­orge W. Bush tax cuts, which were mostly re­tained for mid­dle­and up­per-mid­dle-in­come tax­pay­ers un­der Pres­i­dent Barack Obama, pub­lic opin­ion shifted. For the past 15 years, the “too high” per­cent­age in Gallup’s polling has never ex­ceeded 52 in any year. And in April 2018, only 45 per­cent em­braced that com­plaint; they were out­num­bered by the 48 per­cent who con­ceded that their taxes are “about right.” In short, there’s no wide hunger for lower fed­eral taxes.

At present, the GOP may have no way out of this predica­ment. Trump’s last­minute prom­ise of more tax cuts just be­fore the elec­tion achieved noth­ing, and there is no chance to ful­fill the Repub­li­cans’ other prom­ise – to make the 2017 law’s in­di­vid­ual cuts, set to ex­pire in 2025, per­ma­nent.

In 1990, it was po­lit­i­cal sui­cide for Ge­orge H.W. Bush to sup­port a tax in­crease. The sit­u­a­tion for Trump and Repub­li­cans now may be even worse: Promis­ing to cut taxes for every­one no longer helps them po­lit­i­cally, while promis­ing to raise taxes, on the rich, may help the Democrats in 2020.

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