Time for a War Tax

How to Pay for Escalation in Afghanistan

By STEVE BREYMAN
October 10, 2009

The United States has spent $228.2 billion on combat operations in Afghanistan since October 2001, so the Congressional Research Service tells us. The White House recently said that the single most cost-effective option--withdrawing US fighting forces--was not on the table during its ongoing review of AfPak strategy. This means, among other things, that the cost will continue to mount whether General McChrystal gets his additional tens of thousands of troops or not. The quarter trillion dollar figure does not include the current cost of recruiting young men and women to fight the war (hundreds of millions of dollars per year), the future cost of veterans’ benefits (likely to be gigantic), nor the cost of debt service on the borrowed money. The latter figure could rise as high as $200 billion, according to Nobel Prize-winning economist Joseph Stiglitz. Put together, these figures rival those of the Wall Street bailout.

This has been a war, as is the war in Iraq, and as was the war in Vietnam, that the US waged on future taxpayers’ dimes. One consequence of the Johnson- and Nixon-era war splurge was the stagflation of the 1970s, and the withering of Great Society programs. The self-imposed pay-as-you-go spending rule enacted by Congress in 1990 expired in 2002 just as George W. Bush prepared to invade Iraq. This was a period during which the US ran budget surpluses for the first time since the 1950s. The rule mandated that any new spending be budget neutral: new spending had to be offset by spending cuts or tax increases elsewhere in the budget. A new version of the rule recently passed the House and is currently before the Senate. President Obama has said he will sign the bill into law. As written, the bill does not exempt war spending.

The president also (re)committed to paying for the wars through the regular budget process (this was a campaign promise)—following one 2009 supplemental war spending bill that overwhelmingly passed both houses. Supplementals required a straight up or down vote; no amendments were permitted, as in the regular budget process. Obama’s FY2010 defense budget reflects this more honest approach. But this forthcoming budget simply adds the rapidly growing tab of the wars to the national debt. A truly honest approach would pay for the wars with real money, not funds borrowed from the Chinese and our great-great-grandchildren.

The United States invented the telephone excise tax to help finance the Spanish-American War in 1898. Renewed many times afterwards, during times of both war and peace, the tax (which applies today only to local calls spelled out as such on a phone bill) has essentially been made obsolete by cell phones and bundled service. The revenues, which ended up in the general fund anyway, were never enough to pay the full toll for any war. The War Tax Act of 2010 could remedy this and other defects in the American tradition of paying (or not) for war.

A war tax, called such and sized to cover the full cost of the wars, would signal an important break from the lies and chicanery of the George W. Bush years. The tax should be progressive rather than regressive. It should be renewed or reinstated every year US forces engage in combat on foreign soil, air, or water. The Blackwaters, Lockheed Martins, and Halliburtons—contemporary war profiteers—should pay the lion’s share through targeted and loophole-free corporate income taxes. But none of us who make incomes above a genuine poverty level—not the federal government’s shameful underestimate--should be exempt. Why? Because war is too easy without basic fiscal responsibility.

A vote for war funding—a leading cause of deficit spending--is today without political risk for all but a handful of members of Congress. It does not take much if any deliberation for most members to vote “yes” on “authorizations for the use of force,” and for the supplemental bills to “pay” for the force. Indeed, the only risk they face comes should they vote against war spending. Presidents notice, and potential challengers back home notice. Hardly surprising then that Bush and Obama received everything they’ve asked for in Iraq and Afghanistan from Congress these past eight years.

That same Congress is unlikely to show much enthusiasm for a war tax. Why should it? The current arrangement works just fine for most members, thank you very much. Institution of a war tax would, like all good things, require a years long, focused and strategic grassroots campaign against extraordinary odds and fierce resistance. A war tax addresses the fiscal root of the problem by simply paying for war on an as-you-go basis. A war tax is the fiscal policy equivalent of universal single-payer health care. But it stands even less chance of implementation.

There is no cost-effective alternative to a war tax besides the off-the-table immediate exit strategy. The administration has boxed itself into a deficit-spending corner. It is virtually certain that whatever revised policy emerges from the present round of meetings, it will cost more than the exorbitant status quo.

Congressional war hawks (who double as deficit hawks, even during a recession) the Washington Post editorial board, and General McChrystal are pushing Obama to escalate the eight-year-old war. Again, the White House announced that declaring victory over al-Qaeda in Afghanistan (a fair claim, according to the president) and holding a parade is, unfortunately, not on the near-term horizon.

It’s a shame that the economic cost of the war has not figured at all in the current debate over US AfPak policy. Were it to, escalation would be the first option off the table.

Steve Breyman teaches at Rensselaer Polytechnic Institute. Reach him at breyms@rpi.edu

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