Canton Repository

May 6, 2006

Voinovich: Senate should eye tax hike

By Paul M. Krawzak
Copley News Service

WASHINGTON - Sen. George Voinovich, a self-described deficit hawk, took a turn against his party’s prevailing winds earlier this week in suggesting Congress consider a temporary tax increase to pay for the wars in Afghanistan and Iraq, defending the homeland and hurricane relief.

“I have to say this, and I know it is controversial, but if you look at the extraordinary costs that we had with the war and homeland security and Katrina, the logical thing that one would think about is to ask for a temporary tax increase to pay for them,” he said.

TAX ISSUE

Voinovoich, R-Ohio, raised the issue as the Senate debated and then passed a $109 billion emergency spending bill to provide continued funding for troops in Afghanistan and Iraq and for hurricane relief.

Few observers give a tax increase any chance of passing, especially during the current election year.

On Capitol Hill, where Republican leaders in the House and Senate oppose a tax increase, Voinovich’s suggestion attracted little, if any, notice. President Bush also opposes tax hikes.

Voinovich has no plans to formally propose a tax increase, his spokeswoman Garrette Silverman said. Nor did the two-term senator offer any details for a tax hike.

Silverman said Voinovich hopes to start a discussion about alternative ways to deal with the nation’s imbalance between revenues and spending.

The senator also said a tax increase would be a way for Americans to participate in the sacrifice being made by U.S. troops in Afghanistan and Iraq and their families.

In the past, Voinovich used his clout as a Republican holdout to limit the size of Bush’s 2003 tax cut to $350 billion. More recently, he came out against extending the president’s tax cuts.

But his statement this week marks the first time he has suggested Congress should increase taxes, his staff said.

DEWINE OPPOSED

Sen. Mike DeWine, R-Ohio, who is facing a tough re-election challenge from the Democratic nominee, Rep. Sherrod Brown, D-Avon, opposes a tax increase.

“He would be opposed to increasing taxes at this point in time because he fears it would hurt the economy,” his spokesman Mike Dawson said.

In a speech to Senate colleagues, Voinovich painted a dire picture of the nation’s economic future.

The former Ohio governor noted that projections indicate Social Security and federal health care spending are expected to consume almost two-thirds of the federal budget by 2030 if current trends continue.

If the nation leaves “the reform of entitlement programs for future congresses to solve, as well as a mountain of national debt to pay off, it will have devastating consequences on the economy and on our children and grandchildren,” he said.

“Some members believe that the solution is to grow the economy out of the problem, that by cutting taxes permanently, the economy will eventually raise enough revenue to offset any current losses to the U.S. Treasury,” he said.

Voinovich disagrees.

“I do not believe that in the current situation our country faces, we can continue to spend more than we take in,” he said.

BOEHNER RESPONSE

Republican congressional leaders including House Majority Leader John Boehner, R-West Chester, have credited tax cuts with stimulating the economy and increasing tax revenues.

On Friday, Boehner pointed to a report from the Congressional Budget Office projecting that as a result of “robust growth in revenues,” the federal budget deficit will fall as low as $300 billion, from previous estimates of $350 billion.

Voinovich’s remarks drew support from Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan fiscal watchdog.

While the coalition believes high taxes stifle the economy, Bixby said a temporary tax to pay for war and hurricane costs would not do damage.

“People get the idea that government is free if you don’t raise taxes when spending is going up, and that’s a bad thing,” he said.

But at the Heritage Foundation, a conservative think tank, analyst Bill Beach argued that even a temporary tax increase would cause a slowdown in the economy.

Voinovich is a “wise man,” said Beach, director of the Center for Data Analysis at Heritage. “He has, I think, a clear vision of the problem. We have a really significant fiscal imbalance facing us now and especially in the future.”

But instead of raising taxes, Beach said Congress should cut spending.

He said the emergency spending bill passed by the Senate includes crop insurance for farmers in Oregon and California that is so “disconnected from Katrina, it’s absurd.”