Democrats looking for GOP cover for planned tax increases

Opinion Journal:

After signing a $787 billion economic stimulus and embracing two annual blowout budgets that will double the national debt over 10 years even before ObamaCare, President Obama is poised to pivot next (election) year and denounce the horrors of deficit spending. So the White House is now floating a bipartisan commission to reduce federal borrowing, and much of the political class is all for it.

We only hope Republicans aren't foolish enough to fall down this trap door, though some are already tempted. A budget deficit commission is nothing more than a time-tested ploy to get Republicans to raise taxes. In the 2009 version, Republicans are being teed up to hold hands with Democrats and agree to become the tax collectors for Obamanomics.

The deficit reduction commission is a longstanding idea that is now being pushed with renewed fervor by Republican Frank Wolf of Virginia and Democrat Jim Cooper of Tennessee in the House and Democrat Kent Conrad of North Dakota and Republican Judd Gregg of New Hampshire in the Senate. All you need to know about the sincerity of the two Democrats is that they're both supporting the multitrillion-dollar health-care entitlement even as they moan about the fiscal dangers of current entitlements.

Mr. Wolf says the commission would be "a 16-member panel that would look at everything—from what the government is required to spend on mandatory entitlements to spending on all other programs to tax policy." Congress would agree to vote up or down on the package through expedited procedures without amendments. Messrs. Gregg and Wolf believe this is the only way to force a Washington consensus to slow the growth of federal spending.

They're correct that current federal commitments are unsustainable, starting with $37 trillion in unfunded Medicare liabilities. They're also right that a Washington consensus is likely to emerge from such a commission, but history shows it is unlikely to favor more than token future spending reductions. The real goal is to get GOP political cover for tax increases so Democrats aren't run out of town in 2010 and 2012 for blowing up the national balance sheet.

Let Mr. Conrad explain: "If one looks at the history of how these major [deficit reduction] agreements have been reached, it's almost always been through some sort of special process." He mentions in particular the 1983 Social Security commission and the 1990 budget deal.

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Democrats are candid, at least in private, about the kind of the deal they have mind this time around. Democrats would agree to means-test entitlements, which means that middle and upper-middle class (i.e., GOP) voters would get less than they were promised in return for a lifetime of payroll taxes. Democrats would also agree to cut appropriations by two or three percentage points and live under pay-as-you-go budget rules—the same rules Democrats promised to live by in 2006 but have since violated routinely.

In return, Republicans would agree to an increase in the top income tax rate to as high as 49% and in addition to a new energy tax, a stock transaction tax, or value-added tax. The Indians got a better deal for selling Manhattan.

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I would not agree to this commission unless there was an agreement that no tax increases would be considered. That would be a bottom line starting position. At that point there could be negotiation on how much to cut from the federal budget.

One of the reasons the Democrats have been such profligate spenders is they hope to create a situation where taxes would have to be raised so they could then spend more. Republicans would be smart to avoid that trap.