NCPA - National Center for Policy Analysis

A WAR SURTAX?

October 4, 2007

Congressional Democrats have tried about every possible ploy to "end the war" in Iraq, albeit without having to take responsibility by cutting off funds.  Now their argument is that a war surtax is needed because war spending is busting the budget and crowding out domestic priorities, says the Wall Street Journal.

In fact, the United States is spending relatively little on defense by historic wartime standards, and that's including the $192 billion in 2007 to fund the efforts in Iraq and Afghanistan.  Consider:

  • As a share of the overall economy, defense spending fell almost in half to 3 percent of gross domestic product (GDP) from 1999-2001.
  • It has since climbed back to 4 percent, and may hit all of 4.2 percent once final figures are in for fiscal 2007, which ended last week.
  • That's still far below the peak during the Reagan arms buildup of 6.2 percent in 1986, and less than half the Vietnam peak of 9.5 percent in 1968.

Further, the war is not crowding out urgent domestic needs, says the Journal:

  • Defense spending in 2007 will probably come in at 19.7 percent of total federal outlays.
  • The Bush Administration request for fiscal 2008 is 20.1 percent, which is still below what it was (21.6 percent) in 1992 when Bill Clinton was elected; as recently as 1987, it was 28.1 percent.

And even with the cost of the war, the federal budget deficit continued to decline in fiscal 2007, to something close to $165 billion, thanks to another year of buoyant revenue gains of about 7.5 percent.  Those revenues flow from a growing economy that a war surtax would hit like a two-by-four, says the Journal.

Source: Editorial, "A War Surtax?" Wall Street Journal, October 4, 2007.

For text:

http://online.wsj.com/article/SB119146139105348517.html

 

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