The real taxation and deficit issue Americans face is not the debt, but how we pay for an unsustainable foreign policy supported primarily by the poor and middle classes’ blood and treasure. We can solve the majority of our financial problems by creating a sustainable national security strategy and making sure the tax code is progressive, thereby ensuring that wealthy Americans pay their fair share of defense spending. In the long run economic policy trumps military policy in providing national security.
Nobel Prize winner Joseph Stiglitz suggests that the war in Iraq alone is costing $4 trillion and counting. That’s more than $13,000 for every American.
There are three cost issues that strategists don’t like to deal with, but which must be addressed: the widening gap between the rich and the poor, the cost of an imperial and unilateral foreign policy, and the cost of a corresponding shift of the burden for that policy onto the poor and middle class.
Behind the smoke and mirrors of the debt crisis, there is a crisis President Eisenhower warned us about. It is the continuing shift in the balance from butter to guns, from a welfare state to an expensive and less productive warfare state. Let’s rewind the tape and see how past generations have financed wars.
My great-grandmother had a diary for her trip from Michigan to the Cashin Mine in Paradox Valley, Colo., in 1901. She and her husband tried to strike it rich mining silver. She wrote a list of everyday items she bought – bread, soap, flour; next to each, was a notation of a tax. That tax paid for the Spanish-American War. Regardless of the wisdom of empire building, our leadership knew that we should not be financially irresponsible. Taxes were raised to pay for the war, and every citizen was reminded of how the bill was paid every time they went to the general store.
In 1862, to support the Civil War effort, Congress enacted the nation’s first income tax law. It was based on the principle of graduated or progressive taxation.
During World War II, President Roosevelt believed that all Americans should pay their fair share of defense. He particularly insisted that rich people carry their share of the burden, because they benefited the most. Wartime mobilization prompted changes to the tax laws. Policymakers broadened the base, increasing the number of taxpayers tenfold between 1939 and 1945. They also established a highly progressive rate structure, with rates reaching 94 percent for the richest taxpayers.
Roosevelt’s progressive approach to tax policy, shaped the American fiscal response to the Great Depression and World War II, and laid the foundation for a tax structure that would last until Ronald Reagan became president. Ever since we became a global power, both Republican and Democratic presidents agreed and continued to make the wealthy pay their fair share of the defense budget– until 1981.
Here are the top tax rates in selected war years:
World War I – 77 percent.
World War II – 94 percent.
Korean War era – 92 percent.
Vietnam era – 77 percent tax.
Gulf War era – President George H.W. Bush raised the top tax rate to 39.6 percent.
Iraq war – George W. Bush cut the tax rate to 35 percent for income of more than $319,000. Historically, no president had ever cut taxes during a war.
During the Vietnam War, those in the highest tax bracket also paid a war surcharge of 10 percent. Ironically, Lyndon Johnson was slammed for his fiscal irresponsibility because he wanted guns and butter.
Today, New York Times columnist Thomas Friedman reminds us that “so-called conservatives are out-pandering L.B.J. They must have it all: guns, butter and tax cuts.” This reflects a lack of moral courage and leadership in Washington D.C.
Let the Bush tax cuts expire and raise the income tax to 50 percent for those who make more than $1 million. This is not punishing the rich. It was reported that Judge Judy makes nearly $45 million a year. She can scrape by on $20 million a year until our sons and daughters are out of the Middle East.
Change must begin with Congress and the Obama administration creating and taking ownership of a realistic and fair strategy to pay for our wars. That is the first step in developing a sustainable strategy based on global leadership rather than global domination. Paying our war debts is an obligation that is a core American value.
James Callard is a retired Air Force colonel. He is an Air Force Academy graduate, and a former professor at the National War College, Fort Lewis College and University of Colorado at Denver. He lives near his boat in Anacortes, Wash.