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First things . . . Richard Falknor on 14 May 2011 04:24 pm

Does Appropriator Frank Wolf Seek A Taxing Bargain?

Virginia 10th District GOP Representative Frank Wolf last Thursday in the Washington Post (“The deficit spending storm we cannot avoid”) applauded

“. . .the ‘Gang of Six’ — Sens. Saxby Chambliss, my Virginia colleague Mark Warner, Tom Coburn, Dick Durbin, Mike Crapo and [Kent] Conrad, chairman of the Budget Committee — for taking up the mantle to put the Bowles-Simpson concept into a legislative plan. They recognize that addressing the debt and the deficit isn’t a simple exercise in rooting out waste, fraud and abuse; eliminating earmarks; and reining in discretionary spending. To be sure, those are important reforms, but alone they won’t come close to solving the crisis. The senators agree that, like the SAFE process envisioned, and as painful as it may be, everything — including what I call tax earmarks for companies and other special interests — must be on the table.”

Veteran appropriator Wolf explained – -

“My idea was for a Securing America’s Future Economy (SAFE) Commission to spend a year holding public forums in the country’s nine Federal Reserve districts, listening to and learning the priorities of Americans and educating the public about the financial tsunami that threatens to engulf our nation. Its recommendations would be sent to Congress in a legislative package designed to right the fiscal ship of state. The keys to SAFE were mandates for an up-or-down vote — similar to the process for closing military bases — and for everything to be on the table: entitlements or mandatory spending; discretionary or all other program spending, including defense; and tax policy. No sacred cows would be fenced off.”

Mr. Wolf declares that “this is an American issue, not a Republican or Democratic one.”

Indeed, Mr. Wolf.  It touches the very future of the Republic.

But how we come to terms with the spending is quite another matter. It is not so much an (Establishment) Republican vs. a Democrat controversy, to adapt Mr. Wolf’s words.

It is, in our view, rather a struggle between smaller-government, free-market conservatives vs. big-government-is-here-to-stay adherents.

In June of 2006, Peter Ferrara wrote “A Grand and Scary Compromise: Combining tax increases with benefit cuts would be a political kamikaze — and an economic disaster” (National Review on Line)

“Members of the old-line Washington establishment have made clear how they want to address this fiscal cataclysm. They are calling for a grand compromise deal between Republicans and Democrats, and conservatives and liberals. That deal would be a major tax increase in return for cuts in entitlement spending. This is what is behind legislation for an Entitlements Commission, which was introduced by Rep. Frank Wolf (R., Va.) on June 7.”

We face unparalleled economic, and freedom (e.g., Obamacare) crises. Consequently Mr. Wolf’s many long-time supporters in the 10th District may now wish to take the time to consider other ways of curing the deficit, and to weigh Mr. Wolf’s earlier record on spending and entitlement expansion.

John Fund and Daniel Mitchell Have Wiser Approaches

The Wall Street Journal’s John Fund describes the emerging Senate plan to raise taxes and its Republican enablers in that paper’s Opinion Journal: Goodbye, Tax Deductions? of last April 25.

Listen to the John Fund video.

Supply-side economist and tax reformer Dan Mitchell wrote last March in his “Norquist Is Right and Coburn Is Wrong: Tax Increases Will Lead to More Spending, Not Lower Deficits”

“I’m a huge fan of Senator Coburn, who was in favor of cutting wasteful spending before it became fashionable. His office, for instance, releases a “Pork Report” every couple of days. But you shouldn’t read it if you have high blood pressure, because it will confirm (and reconfirm, and reconfirm, ad nauseum) your worst fears about tax dollars getting wasted. Nonetheless, I’m on Grover’s side on this tax debate for two reasons. First, we have a spending problem, not a revenue problem or a deficit/debt problem. Red ink is undesirable, to be sure, but it is a symptom of the underlying problem of a government that is too big and spending too much.” . . . “The second reason for a firm no-tax increase position is that higher taxes are a very ineffective way of reducing budget deficits. Indeed, tax increases generally backfire and lead to more red ink. To understand why, it’s important to put away the calculator and instead consider the real world of politics and public policy.”

In Forbes last week, Cato Senior Fellow Mitchell showcased his new video “Seven Reasons Why Tax Increases Are the Wrong Approach.

Readers can watch it here, also read here Mitchell’s “A Laffer Curve Tutorial,” and watch the three accompanying videos explaining the Laffer Curve.

Some Highlights of the Wolf Spending Record

We vividly recall Dan Mitchell’s warning in 2003 that the House-of-Representatives-embellished Medicare Prescription Drug Act would jeopardize the Bush tax cuts.  Mr. Wolf along with most (but not all, Mike Pence for example) Republicans supported that measure.  (To apportion paternity equitably for the Medicare Prescription Drug Act, Mr. Norquist’s Americans for Tax Reform failed to put a spoke in the wheel of that major entitlement expansion so important to the Bush White House.)  Frank Wolf also voted for an expansion of the costly SCHIP program during the opening days of the Obama Administration; he had earlier voted to override then president George Bush’s veto.  (See our A Rush to Government Medicine: SCHIP and the “Stimulus.” ) Mr. Wolf also voted for No Child Left Behind. He voted for the TARP bill in 2008, although one wouldn’t know it from his current anti-deficit rhetoric. Just last month, he voted against the tougher (even than Ryan) Republican Study Committee (Garrett) version of the FY2012 Budget Resolution.

Mr. Wolf expresses concern about the supposed Grover Norquist opposition to getting rid of the “ethanol subsidy” in his Thursday Washington Post op-ed. But in 2007 Wolf voted for the final version of the Energy Independence and Security Act of 2007 which mandates ethanol use. In fairness, Wolf’s op-ed was referring to a dispute over what constitutes a tax hike. But he is using the properly criticized ethanol program as a sympathetic back drop. Consequently readers should be aware of Wolf’s vote for the ethanol mandate. Here are the final 2007 Senate and House votes. Here is our take from 2008: Senate Energy Expert: ‘Dramatic’ Action to Fix Ethanol Mess, where GOP Senator James Inhofe slams the 2007 ethanol mandate.

Good Advice from Heritage Action.

If there is any doubt about problems with what the Gang of Six envisions, Heritage Action’s Nathanael Yellis warned last month in his “Action Alert: Stop the ‘Gang of Six’ Tax Hikes”–

“And, sure enough, the Washington Post gives away the worst kept secret: the Gang of Six is building a plan that will get Republicans to support tax increases:

The ‘Gang of Six’ could propose, possibly next month, a plan that includes deeper entitlement cuts than Democrats have ever supported and tax increases that previously have been anathema for Republicans.

While this looks like an ok compromise: entitlement reform for tax increases, it’s not. The Democratic Congress of the last few years has significantly ratcheted up federal spending. Obamacare alone created several new entitlement programs. Meanwhile, tax revenues have stayed relatively constant. That’s why fixing the deficit starts with real spending cuts, not tax increases.

It’s not conservative policy and Republicans should know better.”

After so many years in Congress, Frank Wolf should also know better.

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