'Everything That Government Can Do'

GEORGE F. WILL

March 04, 1993|By GEORGE F. WILL

WASHINGTON — Washington. -- If only President Taft had not gone golfing at the Chevy Chase Club in 1909. Perhaps we would not be saddled with the federal income tax, or the government growth that it has irrigated and that the Clinton administration considers not rapid enough.

Perhaps, but probably not. By Taft's time there were well-advanced changes -- in the government's revenue base and the government's appetite for action -- that probably would have produced the income tax that helps fuel recurring spurts of government growth of the sort we are about to experience.

At the Chevy Chase Club, and in clandestine evening carriage rides (according to Nancy Sheperdson, writing in the March 1989 American Heritage), Taft struck a deal with senators who wanted to attach to a tariff bill a constitutional amendment empowering the federal government to levy income taxes. If the senators would not attach it, Taft said, the administration would support such an amendment on its own. Taft and many others doubted that it would be ratified.

Wrong. Pressures for the tax had been building since the 1890s, which resembled the 1990s by demonstrating that ''deficits equal deferred taxes.'' At least that is the opinion of Benjamin Baack and Edward Ray, economists at Ohio State University.

In an essay in ''Second Thoughts: Myths and Morals of U.S. Economic History,'' they note that by the end of the 1880s there was intense pressure to reduce tariffs, the largest source of federal revenue. And because America was by then an industrial power, it was importing primarily raw materials which were subject to lower tariffs than finished goods, so revenues were falling. Furthermore, federal land sales, another source of revenue, were declining. But spending was increasing, especially for the Navy, which by 1905 received 20 percent of the federal budget. And Congress, acquiring a taste for large social programs to redistribute income, substantially increased pensions for veterans, a lobby then as potent as the elderly are today.

In 1894 the government ran the first deficit since the Civil War and enacted a short-lived income tax (it was declared unconstitutional in 1895). In 1913 the Constitution was amended and Congress enacted another income tax: 1 percent on income between $3,000 and $20,000, with a 6 percent surcharge on higher incomes. Only 1 percent of Americans paid anything. Then the war came. By 1919 the top rate was 77 percent, and taxable income was lowered to $1,000.

The foundation of the modern state -- a mechanism for raising vast revenues -- was in place. The mere existence of the mechanism altered America's political culture by quickening the itch of the political class to provide benefits to client groups who were convinced that they would be net winners from income transfers.

But the postulated relationship that ''deficits equal deferred taxes'' is a contingent, not a necessary, relationship. It is contingent on a particular kind of political culture, one debased by the politics of envy (clothed in the language of ''fairness'') and dominated by a political class offering an expanding menu of popular benefits that ostensibly will be paid for by unpopular minorities (''the rich,'' ''corporations''). The Clinton administration may become both a cause and an effect of such a culture, on a historic scale.

A rough but serviceable measure of an administration's leaning to the left is its reluctance to recognize limits on its competence or its claim on the economy's resources. The Clinton administration may become the most left-leaning in American history (not counting the command economies of ''war socialism'' under Wilson and FDR).

Hardly a day passes without something like the recent statement by Labor Secretary Robert Reich concerning why access to federal programs currently serving displaced workers should be expanded to cover persons not properly described as displaced: ''If somebody feels that they want to improve their living standard, the government should do everything that it can do to help that person. If you quit jobs and you want to get retrained for a better job, you ought to get help in that respect as well.''

So, amid solemn Washington talk about ''reining in entitlements,'' Mr. Reich is casually postulating a new one: If, desiring a better job, a person quits an old one, that person is entitled to ''everything that [Washington] can do'' to help.

And there is this from Mr. Clinton's economic blueprint, ''A Vision of Change for America'': ''The administration proposes to invest $30 million in 1994 and $50 million in each of the next four years, toward the international goal of reducing world-wide deforestation.'' This expansion of an old program (in the name of a Bush administration undertaking at the 1992 Rio ''Earth Summit'') is listed in a chapter called ''What We Must Do Now.''

Must. Right now. Trees, overseas. Call it ''investing in America.''

George F. Will is a syndicated columnist.

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