Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of the forthcoming book “The Benefit and the Burden.”
Back in 1995, flush from taking control of both the House and Senate for the first time since 1954, Republicans made tax reform one of their first priorities. House Speaker Newt Gingrich and Senate Majority Leader Bob Dole asked Jack Kemp, the former congressman and secretary of housing and urban development, to lead a commission that would report back with recommendations for fundamental tax reform.
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Among the members of the Kemp commission, formally the National Commission on Economic Growth and Tax Reform, was Herman Cain, then the chief executive of Godfather’s Pizza. I assisted the commission in a voluntary capacity, along with a number of other Republican tax policy wonks. I still have a copy of the commission report, issued in January 1996, that Mr. Cain and the other commission members signed.
I don’t have much recollection of Mr. Cain’s contribution to the commission’s work, but I don’t have much recollection of mine, either. I remember him as being very friendly and easy to work with.
In the end, the Kemp commission didn’t come up with a specific tax reform plan. Its report set forth only a set of general principles that didn’t add much to what everyone already knew about the Republican tax philosophy. It didn’t matter very much; it quickly became clear that Congressional Republicans were losing interest in tax reform, which implies revenue-neutrality, in favor of tax cuts.
Tax cuts had effectively been off the table since 1981, as budget deficits made them politically impossible. Republicans today prefer to forget that Ronald Reagan signed into law 11 major tax increases, including the Tax Equity and Fiscal Responsibility Act of 1982, the largest peacetime tax increase in American history.
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Of course, there was still a net tax cut during the Reagan administration. The same source of the table above, the federal budget for fiscal year 1990, shows that revenue was $264.4 billion lower in 1988 than it would have been without the 1981 tax cut. But Reagan effectively took back half of it by his last year in office.
It was their inability to simply cut taxes that really made Republicans interested in tax reform, which had historically been of more interest to Democrats. It was only by pairing tax increases with tax cuts that Republicans could keep alive their goal of reducing statutory tax rates. Their ultimate goal has long been to abolish progressivity by having a single tax rate that applies to everyone.
In the 1980s, Republicans settled for incremental progress toward this goal, which explains their support for the Tax Reform Act of 1986.
But in their hearts, Republicans don’t ever want to raise taxes; they only want to cut them. Consequently, tax reform has always taken a back seat to tax cuts whenever political and economic conditions permitted them. Those conditions began to emerge just as the Kemp commission finished its work.
Bill Clinton, in his budget for fiscal year 1997, which was released in early 1996, projected a federal budget surplus by 2001. It turned out that the tax increases initiated by George H.W. Bush in 1990 and by Mr. Clinton in 1993, which were strenuously opposed by virtually all Republicans, did exactly what they were supposed to do and sharply reduced federal budget deficits.
Nevertheless, Republican dogma insists that tax increases just fuel spending and never reduce the deficit. As the Republican tax guru Grover Norquist put it last week, when taxes are on the table there are no spending cuts. “When taxes are off the table, you get spending cuts,” he said.
My friend Grover is factually wrong. Spending as a share of the gross domestic product fell after both the 1990 and 1993 budget deals, in large part because of tough budget controls that Republicans abandoned in 2002 so that they could cut taxes without restraint. And contrary to Mr. Norquist’s theory, the tax cuts of the George W. Bush years did not constrain spending, which rose as a share of the G.D.P. almost every year of his administration (as the raw data confirms).
The point is that once deficits started to disappear, Republicans lost interest in tax reform and turned their attention instead to tax cuts. In 1997, they were successful, joining with Democrats to cut the capital gains rate and create tax credits for children and education, among other things. Of course, in the 2000s, Republicans cut taxes heavily without regard to the budget deficit.
It is only because they have invested so much effort in attacking President Obama for budget deficits that actually arose in large part from Republican policies, like the Medicare Part D program and two unfunded wars, that Republicans are somewhat inhibited from offering more tax cuts today.
This is what has turned their attention back toward tax reform, like Mr. Cain’s 9-9-9 plan, which apparently has evolved into a 9-0-9 plan, and the flat tax, which Gov. Rick Perry of Texas now champions.
While tax reform is a worthy goal — and long overdue — the recent interest by Republicans in the subject should not be taken too seriously. They are only biding their time until political conditions allow them to once again cut taxes.
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