Clayton Mitchell — Sequestration Solutions: Republican Tax Reform Is Not So Different From Democrat Loophole Closing

By Clayton Anderson Mitchell, Sr.

It seems to me that of all the indictments the Republicans have made of the President recently – and during their copious campaign of protest during the last two election cycles – that the one that is most striking is the allegation that the President belongs to the only party that sees taxation as necessary component of a comprehensive solution to our country’s fiscal tribulations.

Many otherwise well-meaning people subscribe to this belief because the “tax and spend Democrat” cliché is repeated ad nauseam over the conservative airwaves. Republican leaders such as Virginia Governor Robert McDonnell, who was elected during the mid-term Tea Party revolution of 2010, have become the toast of the town in talk radio circles because they espouse the message of “slash government spending and cut taxes” as the only viable solution to government budget deficits.

So now the Republicans are getting their wish. Through mandatory federal budget sequestration, across-the-board cuts to federal programs that employ hundreds of thousands of people throughout the fifty states takes effect on March 1. The budget sequestration is the default compromise adopted by both Democrats and Republicans over eighteen months ago because the two parties could not reach agreement on mutually sensible solutions due to each party’s narcissistic stubbornness.

I recognize and do not wish to gloss over the fact that the budget sequestration idea – as flawed as it is – was the brainchild of the Obama White House. Both parties, however, adopted the proposal as the backup plan to cut federal spending in reaction to the American public’s quite understandable bitterness towards Washington’s unfettered and undisciplined spending spree since the budget surplus days at the turn of the century.

It is universally understood that the sequestration is wholly inadequate to resolve the nation’s long-term fiscal maladies. A much grander plan is required to put the country back on a sustainable path towards solvency and to reform and preserve entitlement programs for future generations. But despite the best efforts of a few, a grand budgetary solution is seemingly elusive.

In light of the sequestration’s inadequacies – what are the Republicans to do? After all, the tens of billions of dollars of mandatory cuts only comprise a mere two percent cut in overall federal spending during the next two fiscal years. Surely more profound spending cuts are required to restore fiscal soundness. Are Republican leaders like Governor McDonnell pounding the table demanding deeper federal budget cuts? Hardly.

Anyone who has read my prior articles is familiar with an undeniable truth – that while Republican politicians campaign against the size of government, Republican administrations have never simultaneously cut spending and taxes in real terms. In fact, the last alleged all-conservative federal government demonstrated its own penchant for enthusiastically doling out government largess. President Bush and the Republican-controlled Congress created a new health care entitlement spending program without a funding source (Medicare Part D) and expanded the size of government by creating new government bureaucracies (The Department of Homeland Security).

Even on the local level, Republican administrations habitually raise taxes. In our home state of Maryland, about ninety days into their newly formed regime, the all-Republican Queen Anne’s County Commissioners abandoned their 2010 campaign promises to cut local taxes because they felt queasy cutting the school budget in full view of soccer moms and baseball dads. They instead unanimously and immediately raised significant property and local income taxes to balance their budget over the justified protest of their political campaign supporters. All five Republican commissioners learned that governing is a much more complicated enterprise than campaigning.

In case you missed it, there was a jaw-dropping moment on the February 24th episode of Face the Nation. Governor McDonnell and Maryland’s Governor Martin O’Malley appeared together to debate and promote their respective parties’ opinions on the looming sequestration cuts. Presumably, they were both selected to be on the show as potential competitors in the 2016 Presidential contest.

Consistent with his prior statements, Governor O’Malley blessed the “balanced approach” to resolve the sequestration dilemma of targeting budget cuts and increasing revenues through tax reform and closing loopholes. In response, did Governor McDonnell taunt or challenge Mr. O’Malley? Did Governor McDonnell lecture his neighboring state’s leader about the errors of his “tax and spend” ways? Did Governor McDonnell demand that the Republican House remain vigilant and see the sequestration cuts through to their inevitable end? No.

Governor McDonnell, faced with devastating cuts to the nation’s defense budget (and the loss of Virginia jobs), concurred with Governor O’Malley that the sequestration as adopted should not occur. Did Mr. McDonnell adopt closing loopholes to increase tax revenues as a part of the solution to the problem? Sort of.

Governor McDonnell, in carefully crafted words, was agnostic on further taxation. He did not weigh in with a definitive opinion and instead hedged by deferring the answer to that question to the leaders in Congress. When faced with the actual consequences of his party’s staunch official position, the Virginia leader followed his party’s longstanding precedent and caved. In fact, he joined Governor O’Malley in calling for an alternative solution to mandatory across-the-board sequestration cuts. Mr. O’Malley rightfully praised Mr. McDonnell for following his lead and celebrated the conservative’s acceptance of the need for an alternative “balanced” solution.

I could dilate upon the recent views of other Republican executives regarding sequestration – like Governor Brewer of New Mexico and Governor Christie of New Jersey – but it would be cumulative and repetitive. What the lessons of the past eighteen months have shown us is that while the public demands fiscal sanity in Washington, it also requires the government to provide for a strong defense, a solvent social security system and meaningful healthcare. As evidenced by his remarks on Face the Nation, Mr. O’Malley clearly understands this.

What is not politically possible is a revolutionary tectonic shift from current mandatory spending levels to immediate austerity as demanded by the conservative right. Congruently, what is inherently unfair is when companies like Facebook and General Electric make billions of dollars and pay absolutely no federal income taxes (due to special interest tax deductions) while lower and middle class wage earners are now required to pay two percent more in payroll taxes.

As recognized by both parties, the current tax system is out of synch with today’s economic reality. Whether you call it “closing loopholes” as the Democrats prefer or “tax reform” as the Republicans prefer, the result is a necessary increase in revenues to the government through a broader taxpaying base and a reformation of entitlement programs.

If he was upfront and straightforward, Governor McDonnell would not hedge his remarks and readily admit that the Republicans’ actual current position on taxes and spending is not so different from the Democrats’ position. Unless you have not seen your paycheck stub recently, the Republican-controlled House already voted to raise your payroll taxes just after New Year’s Day.

Conversely, Mr. O’Malley was not afraid to explain and justify his position in plain words to the public on a nationally broadcasted television program. It has become self-evident that as President Obama visited the Virginia naval shipyards warning of the ascetic sequestration cuts this past week, the conservative backbone of the Virginia Tea Party’s presidential hopeful quickly disintegrated.

While the Republicans will continue to keep rising stars like Marco Rubio and Paul Ryan in the front window for show and advertising, in the murk of the congressional smoky backrooms the conservative representatives will eventually and ultimately sell their purist souls once again to the tax and spend gods – not because they want to – but because it is politically necessary to ameliorate the local effects of meat cleaver sequestration. Who doubts that this will not happen?

Clayton A. Mitchell, Sr. is an attorney in Stevensville and regular contributor to Center Maryland.