As just about everyone in the English-speaking world already knows, late last night the Senate passed the tax reform package on a party-line vote, 51-49. (Tennessee’s Senator Bob Corker was the lone Republican to vote against it.) The bill includes provisions that not everyone will like – it will hurt homeowners in high-tax states such as New York and California – but it achieves several important things, including the repeal of the “individual mandate” provision of ObamaCare. There will be a joint House-Senate conference to resolve differences in the chambers’ bills. I predict that the most important features will survive.
The reduction of tax rates is one of the few steps Congress is willing to take in the name of limiting the federal government. It’s highly indirect. It doesn’t usually have any significant effect on the rate of growth in government. But at least it gestures toward the notion – widely though foolishly held – that what we earn by our labor is our rightful property.
What Congress is absolutely unwilling to do is actually shrink the federal Leviathan. Nor will the tax reform bill result in any such shrinkage.
You might have read coverage of the fusillades over the bill in which various Democrats complained that it would “increase the debt.” Republican arguments that reductions in tax rates are usually followed by economic growth that results in higher federal tax revenues get no respect from them. But that’s a pretty thin cover for the Democrats’ real objection to lowering tax rates. They’ve never been sincerely concerned about the national debt. They certainly weren’t concerned about it during the Obama years.
The Democrats don’t want you and me thinking that our income is ours, to be disposed of as we, not they, prefer. Any suggestion of that sort terrifies them. It implies a limitation on their power, if not by Constitutional provision then by ethical principles.
No federal court has ever challenged the unlimited power of Congress to tax. Indeed, income tax rates as high as 91% have passed muster when challenged in court, usually on the holding that Congress’s taxing power, being explicitly delegated by Article I, Section 8, is beyond the reach of the judiciary. Ironically, an important event of the Constitutional period involved an implicit limitation on Congress’s power to tax. Here’s the relevant clause of the Constitution as it was ratified:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
Specificity was a particular concern of the Framers. Compare and contrast the version of the Taxation Clause above with the following, which was proposed in its place:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises; to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
Did you spot the difference? If not, look at the punctuation marks after the word Excises in each version. A semicolon says that what precedes it is independent of what follows. A semicolon would separate the taxing power from the specific purposes for which taxation was authorized. It would have authorized Congress to collect taxes for any reason or none.
Gouverneur Morris wanted the semicolon. Others among the Framers, James McHenry prominent among them, argued against it. As the American Revolution was largely a revolution in opposition to taxation and in defense of property rights, the comma was maintained.
But if taxation is licit only for the legitimate purposes of Congress, then we must know what those purposes are.
If you haven’t read Article I, Section 8 of the Constitution recently, that’s where the legitimately delegated powers of Congress are specified. The Framers intended to limit Congress to those powers and no others. In the two centuries and more since the ratification of our Supreme Law, the federal government has chiseled away at its limitations under a variety of rationales. Yet the combination of that section and the Tenth Amendment should have left no doubt whatsoever that if it isn’t explicitly delegated to Congress in Article I, Section 8, then Congress has no power to do it.
Yet when Nancy Pelosi, Speaker of the House during the crossfire over ObamaCare, was asked what Constitutional provision authorizes Congress to legislate on medical insurance, she indignantly replied that “That is not a serious question.” But it was quite serious. That she wasn’t willing to answer it doesn’t change that. Her problem, of course, is that the answer is “None.”
Pelosi is on record as saying that Congress’s power is unlimited, owing to the General Welfare clause. Constitutional scholar Richard Epstein has demolished this claim, noting in particular that the phrase isn’t the “general welfare,” which is so ambiguous as to be meaningless, but the “general Welfare of the United States,” which is much more specific. As if amplification were needed, there’s the eighteenth clause of Article I, Section 8:
To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
If Congress’s power were truly unlimited, what purpose would that clause have served? In the exercise of unlimited power, no imaginable enactment could fail to be “necessary and proper!”
But unlimited power is what every statist wants – and the Democrats are ur-statists. But let’s not categorically exclude the Republicans from that characterization.
I predict that if the final bill to emerge from the conference committee is reasonably close to the one passed by the Senate, there will be an increase in the rate of American economic growth that will add substantially to federal revenues. I also predict that no matter what those revenues might be, Congress will overspend them, adding to the national debt.
There’s no amount of money that can’t be overspent. Congress’s fatal power:
To borrow Money on the credit of the United States;
...amplified to infinity by the Federal Reserve system, guarantees it. The object of any particular expenditure will be the exercise of an anti-Constitutional power nine times out of ten. Yet no court will rule against such an exertion of power.
What Congress will never do is concede that there are any limits to its legislative powers. To do so would deprive federal legislators of what they prize above all other things: power. It would also deprive them of the ability, via “earmarks” and other devices, to purchase the votes they need to remain in office.
The tax reform act will probably be good for American citizens. It will probably increase federal revenues enough to be “revenue neutral” or better. But the debt is guaranteed to increase even so. Remember the pattern of the Reagan years:
| Fiscal Year | Federal Receipts, $Billions | Federal Expenditures, $Billions | Annual Deficit, $Billions |
| 1980 | 517.1 | 590.9 | 73.8 |
| 1981 | 599.3 | 678.2 | 79.0 |
| 1982 | 617.8 | 745.8 | 128.0 |
| 1983 | 600.6 | 808.4 | 207.8 |
| 1984 | 666.5 | 851.9 | 185.4 |
| 1985 | 734.1 | 946.4 | 212.3 |
| 1986 | 769.2 | 990.5 | 221.2 |
| 1987 | 854.4 | 1004.1 | 149.8 |
| 1988 | 909.3 | 1064.5 | 155.2 |
| 1989 | 991.2 | 1143.7 | 152.5 |
| 1990 | 1032.0 | 1253.2 | 221.2 |
[The above figures were taken from the Statistical Abstract of the United States, 2001 edition.]
If you can look at the table above, which shows federal revenues growing swiftly but federal expenditures rising even faster, and still persuade yourself that “tax rate reductions cause the debt to grow,” you and I don’t share a common understanding of arithmetic, much less of political dynamics. My point is made: Congress will spend every dollar it gets and quite a few more. What else could we expect from a body that claims unlimited power over everything?
They won’t relinquish that power by their own act. It must be taken from them...and a “balanced budget amendment” won’t do it. The completion of that thought is left as an exercise for my Gentle Readers.
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