THE APPROPRIATE LIMITS OF NONPARTISANSHIP IN A CRISIS:
Why The President's Mandate Does Not Cover The Capital Gains Tax Cut And Other Proposals

By NEIL H. BUCHANAN

Friday, Sep. 21, 2001

The terrorist attacks of September 11 have created an atmosphere of unity and nonpartisanship in Congress. As in any national crisis, people believe that it is important to support the President, if for no other reason than to demonstrate to the world that we can work together when we face genuine challenges. This is certainly such a time.

There have to be limits, however. If Republicans expect Democrats not to oppose the President — or, at least, not to oppose him for reasons of partisanship — then Democrats must expect, in turn, that the President and his GOP brethren will not seize on the Democrats' cooperativeness as an opportunity to advance their prior agenda.

The suspension of serious opposition by Democrats to the President's agenda is predicated on the idea that opposition is not only unseemly but also actually unnecessary, because the President is focused solely on those actions that are necessary to deal with the crisis. The Democrats' commitment to nonpartisanship, accordingly, is not a blank check to the President to revive old agendas, such as the capital gains tax cut, now on the table, or exploit unity for his own ends — by railroading through currently proposed federal judges or passing legislation that he favors, but that is not related to the terrorist acts and their aftermath.

The Pearl Harbor Analogy

Many commentators immediately compared the attacks of last week with the military attack on Pearl Harbor in 1941. Extending that comparison, we should remember that President Roosevelt did not respond to the Pearl Harbor attack by reviving the unsuccessful parts of his agenda.

He did not, for example, re-introduce the "court-packing plan" of 1936, in which he had unsuccessfully tried to dilute the power of the older Supreme Court justices who had handed down decisions that FDR did not like (and that had invalidated some of his favored programs). The country was going to war, and it would have been untoward for the president to take advantage of his strengthened political position for so narrow a purpose.

While historians may argue that FDR simply no longer felt the need to pack the courts, that is not the issue. If he had tried, under the cover of the national crisis, to achieve a victory that he had not attained in earlier years, he would have been wrong to do so.

Of course, some policies were changed after the attack on Pearl Harbor. Most directly, we entered a war that we had resisted entering prior to that time. The previous successes of the isolationists in Congress were repudiated immediately.

But the most obvious reason for this was simply that circumstances were vastly different. Most everyone in the country, even those who had previously opposed foreign entanglements, was in favor of our entry into the war.

There is, of course, a lot of ground between these two polar cases — instances where we say, "That's not on the agenda right now, because we have bigger things to deal with," and those where we say, "The world has changed, and we've decided to change our policies." But we should at least try to place new proposals by the President and his backers on this continuum, weighing whether nonpartisanship is truly appropriate in each instance. Despite the atmosphere of crisis, we must not allow calls for "loyalty" to drown out reasoned debate.

A New Court-Packing Plan?

The most direct analogy to the court-packing plan is, of course, President Bush's pending appointments to the federal courts. These were among the most contentious of the issues facing the Congress before September 11, and they still should be.

Nothing about our unfortunate new circumstances should compel Democrats and moderate Republicans in the Senate now to capitulate to the president. Judges serve for life, and the issues that most federal judges will face over future decades–while certainly affected in part by our responses to terrorism–remain largely the same.

Therefore, it would be an enormous mistake for the Senate to say, "Well, now's not a good time to argue, so let's just confirm all of these appointments." More importantly, though, it would be an even bigger mistake for President Bush or his lieutenants even to try to push those nominations forward under the guise of "rallying behind the president." To do so would be purely opportunistic, and it would poison the well of good faith from which the president must draw for support on current and future issues.

Economic Policy: A Difficult Question

Economic policy is less clear-cut, because the economic landscape is so completely different (in degree, if not in kind) than it was only days ago.

Airlines are laying off tens of thousands of employees, and all kinds of related businesses (hotels, restaurants, tourist attractions, car rental companies, etc.) are starting to feel a severe pinch. The economy was already poised for recession, and now most economists worry that the worst has become unavoidable.

Clearly, new circumstances call for new thinking, and we have already seen some: Thankfully, both parties have dropped their obsession with the Social Security trust fund. What we need more than anything right now is more spending, and the best source of that spending is direct purchases by the federal government. The immediate release of funds to finance the clean-up and rebuilding efforts in New York and Washington was absolutely justified.

Disturbingly, however, the most noise being made in Congress right now concerns a renewed push for a further reduction in the capital gains tax–a tax that is already much lower than other taxes in the federal tax code. This is inappropriate for two reasons.

First, it does not directly respond to the crisis. Even those who claim–based on virtually no credible economic studies–that cuts in capital gains taxes will significantly increase economic growth know that such a process would take a very long time. The only immediate effect of a cut in capital gains taxes would be to put more money into the hands of the wealthy, who are the least likely to prop up the economy by spending their money, since they need not spend just to satisfy basic needs.

Second, and worse still, this policy would create an incentive to sell stocks, pushing down already low stock prices and further exacerbating the immediate problems in the financial markets.

A capital gains tax cut, then, far from spurring the economy, would actually slow it down.

More of the Same

The Republicans' renewed push for this tax cut is also inappropriate because it is a naked attempt to cash in on a crisis to advance their longstanding agenda. They have always wanted to cut or even eliminate capital gains taxes, and they still do.

Nothing has changed to make this tax cut any more (or less) compelling as a long-term economic strategy. Therefore, any proposal to change this tax must rise or fall on the merits.

Opponents of further cuts should not feel that they would be disloyal to the country to oppose this plan. And again, it is even more inappropriate for the Republicans to insinuate that one's stand on capital gains taxes reflects on one's patriotism.

An Analogy with the Estate Tax

An interesting analogy concerns the estate tax. Suppose that, quite contrary to reality, President Bush had come into office proposing to increase taxes on estates (even to the point of banning inheritance altogether). It is easy to imagine that he would have gotten nowhere with such a proposal. Now, however, we have learned that Osama bin Laden is a child of privilege and that he has financed large parts of his terrorist network with wealth that he inherited from his Saudi family. Should that change our estate tax policy, and allow the President to push his "ban the estate tax" plan through?

An opportunistic politician could say, "See? I always said that inherited wealth is bad, and now we know that inheritance financed the deaths of innocent Americans. Anyone who opposes my plan is un-American and a supporter of terrorists." If that opportunistic politician happens to be the President or a member of his party, it would be the height of irresponsibility for the opposition party to go along in the name of patriotism.

Why We Still Need Policy Debate

While fanciful, this example highlights the potential illogic of crisis-based justifications. If we are to confiscate wealth, we should do so only if we have decided that that is a good idea. Similarly, if we are to cut capital gains taxes — thus immediately increasing the wealth of the rich — we must do so because such a policy is in the country's best interests.

Especially when the proposed policies have long-term consequences, it is as important as it ever was to debate the merits of new laws. Indeed, it is patriotic to do so — for it serves the Nation's interests to have both the President it elected and the Congress it elected take full part in important policy decisions.

Congress and the nation are understandably searching for leadership, and unified leadership at that — and they are looking in the only place where it might be found. This should not cause the loyal opposition to discontinue reasoned debate.

Most importantly, it should certainly not embolden the party in power to push through its previously stalled wish list of policies. Steamrolling the opposition can be fun in normal times, but it is the height of irresponsibility when the nation is in crisis.


Neil H. Buchanan, Ph. D., teaches economics at the University of Michigan, where he is also a J.D. candidate.

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