Was It Wrong To Put Iraq on the Credit Card

A blog about business and economics.
Oct. 15 2012 11:30 AM

Why Does Joe Biden Wish We'd Paid for the Iraq War With Higher Taxes?

153958553
US Vice President Joe Biden (R) and Republican vice presidential candidate Paul Ryan (L) depart the stage following their debate at the Norton Center at Centre College in Danville, Kentucky, October 10, 2012, moderated by Martha Raddatz of ABC News.

Photo by SAUL LOEB/AFP/GettyImages

Here's a moment from the VP debate that I didn't totally understand at the time and I don't think has gotten the scrutiny it deserves. It helps illustrate how badly wrong the conventional wisdom is about Democrats and the budget deficit—if there's a problem with the party in this regard it's that they're much too sincerely committed to low deficits.

Here's Biden:

And, by the way, they talk about this Great Recession if it fell out of the sky, like, "Oh, my goodness, where did it come from?" It came from this man voting to put two wars on a credit card, to at the same time put a prescription drug benefit on the credit card, a trillion-dollar tax cut for the very wealthy. I was there. I voted against them. I said, no, we can't afford that.
And now, all of a sudden, these guys are so seized with the concern about the debt that they created.
Advertisement

So on one level, Biden's point here is that Republicans are huge hypocrites on the subject of debt. Absolutely true. But what's this about wars on the credit card? I heard some snark about this to the effect that Biden voted for the wars too. And so he did. But he also opposed the 2001 and 2003 Bush tax cuts, and this kind of rhetoric was common from Democrats at the time. The party was split on the war in Iraq, but united on the principle that taxes should be higher to offset war spending.

But why? What kind of sense does that make?

Leave aside the ridiculous notion that the Great Recession was caused by Bush-era debt. Was anything in any way made worse but the fact that taxes weren't higher during the Bush years to pay for the wars? For opponents of those wars the idea that they should be "paid for" was attractive as a foreign policy point. People prefer to pay lower taxes rather than higher taxes, so financing the wars with taxes rather than borrowing would have created an anti-war constituency of people looking for tax cuts.

But as economic policy this makes no sense.

Now you can look to Vietnam for an example of a war that maybe should have been paid for with lower taxes. The Vietnam-era policy situation was very expansionary, which kicked off the early phases of the Great Inflation of the era. The Federal Reserve could have kept inflation in check with higher interest rates, but that would have crowded out potentially useful private investment. But during the Bush years, we had low inflation, low interest rates, and plenty of private investment. What would higher taxes have accomplished? There are lots of valid criticisms to be made of Bush-era fiscal policy. Low taxes could have gone to bolstering working class incomes, for example, rather than those at the high end. We could have made potentially useful domestic public investments rather than spending all that money in Iraq (according to HSR opponent Randall O'Toole, for example, a 12,800-mile nationwide true high-speed rail network could have been built for roughly the cost of the war). But the idea that we should have relied more on taxes and less on borrowing doesn't hold much water.

TODAY IN SLATE

History

Slate Plus Early Read: The Self-Made Man

The story of America’s most pliable, pernicious, irrepressible myth.

Rehtaeh Parsons Was the Most Famous Victim in Canada. Now, Journalists Can’t Even Say Her Name.

Mitt Romney May Be Weighing a 2016 Run. That Would Be a Big Mistake.

Amazing Photos From Hong Kong’s Umbrella Revolution

Transparent Is the Fall’s Only Great New Show

The XX Factor

Rehtaeh Parsons Was the Most Famous Victim in Canada

Now, journalists can't even say her name.

Doublex

Lena Dunham, the Book

More shtick than honesty in Not That Kind of Girl.

What a Juicy New Book About Diane Sawyer and Katie Couric Fails to Tell Us About the TV News Business

Does Your Child Have Sluggish Cognitive Tempo? Or Is That Just a Disorder Made Up to Scare You?

  News & Politics
History
Sept. 29 2014 11:45 PM The Self-Made Man The story of America’s most pliable, pernicious, irrepressible myth.
  Business
Moneybox
Sept. 29 2014 7:01 PM We May Never Know If Larry Ellison Flew a Fighter Jet Under the Golden Gate Bridge
  Life
Dear Prudence
Sept. 30 2014 6:00 AM Drive-By Bounty Prudie advises a woman whose boyfriend demands she flash truckers on the highway.
  Double X
Doublex
Sept. 29 2014 11:43 PM Lena Dunham, the Book More shtick than honesty in Not That Kind of Girl.
  Slate Plus
Slate Fare
Sept. 29 2014 8:45 AM Slate Isn’t Too Liberal, but … What readers said about the magazine’s bias and balance.
  Arts
Brow Beat
Sept. 29 2014 9:06 PM Paul Thomas Anderson’s Inherent Vice Looks Like a Comic Masterpiece
  Technology
Future Tense
Sept. 30 2014 7:36 AM Almost Humane What sci-fi can teach us about our treatment of prisoners of war.
  Health & Science
Bad Astronomy
Sept. 30 2014 7:30 AM What Lurks Beneath The Methane Lakes of Titan?
  Sports
Sports Nut
Sept. 28 2014 8:30 PM NFL Players Die Young. Or Maybe They Live Long Lives. Why it’s so hard to pin down the effects of football on players’ lives.