Daniel J. Mitchell

My daily email containing the editorials and opinion columns from the Washington Post included an item written by E.J. Dionne entitled “Supreme Court activists: Conservative justices forget we’re a democracy.”

Surely this was a mistake.

I suspect he does understand, at least with regard to the first question. For instance, I’d bet a lot of money that he was correctly in favor of the Court’s decision to protect flag burning as a form of political speech, notwithstanding public opinion and congressional approval.

But he seems to join with other leftists in treating the interstate commerce clause as some sort of blank check for federal intervention into every aspect of our lives. And it shows up in various ways in his column.

…conservative justices are prepared to act as an alternative legislature…discussing whether parts of the law could stand if other parts fell… Sotomayor asked what was wrong with leaving as much discretion as possible “in the hands of the people who should be fixing this, not us.” It was nice to be reminded that we’re a democracy, not a judicial dictatorship. …This is what conservative justices will do if they strike down or cripple the health-care law. …a court that…sees no limits on its power, no need to defer to those elected to make our laws.

At the risk of being blunt, the conservative justices are doing exactly what they should be doing. They’re deciding if a law enacted by Congress is consistent with the powers granted to Congress by the Constitution.

America has a democratic form of government, but we are not a democracy. At least not in the sense that 51 percent of the people have the unlimited right to rape and pillage 49 percent of the people.

I have no idea of the Supreme Court will make the right decision, but I am overwhelmingly confident that the Founding Fathers didn’t envision mandated health insurance as a function of the federal government.

But maybe I’m just too old fashioned, because when I peruse the enumerated powers, I don’t see any authority for a Department of Energy either. Or a Department of Agriculture. Or a Department of Commerce. Or Department of Housing and Urban Development. Or Department of Education. Or a Department of Transportation. Or…well, you get the idea.

New Developments from Japan Show the Left Is Wrong on Two Big Fiscal Issues

There are several semi-permanent fiscal policy fights in Washington, most of which somehow are related to the big issue of whether government should be bigger or smaller.

Today, I want to focus on two of those battles, and point to developments in Japan to make the case that the left is wrong.

First, let’s look at a couple of sentences from a Wall Street Journal story about Japanese fiscal policy.

Top officials from Japan’s government and ruling party formally endorsed a revised bill to double the country’s sales tax, despite strong objections from other party members, in a sign of their determination to rein in the nation’s soaring public debt. …The legislation will double the current 5% sales tax in two stages by 2015 as a way to help pay for the nation’s growing social welfare costs as the population ages.

I realize I’m a strange person and I look at everything through a libertarian lens, but I think this story provides strong support for my viewpoint on two important issues.

1. Higher taxes lead to higher spending – Just like in the United States, politicians in Japan claim that they have to raise taxes to deal with deficits and debt. Indeed, the excerpt above includes that assertion, reporting that the VAT increase would be “to rein in the nation’s soaring debt.”

I think this is nonsense. Politicians are motivated by a desire to finance bigger government. And that’s what’s happening in Japan. Later in the article, we see that the real purpose of the tax hike is to “pay for the nation’s growing social welfare costs.”

2. The VAT is a money machine for big government – I’ve cited the European evidence to show that small VATs become big VATs in part because it is a hidden tax. My statist friends often respond by saying I need to look at Japan, Canada, and Australia, where VATs haven’t been increased. I then respond by saying it’s just a matter of time. So, even though I would like to be wrong, Japan is confirming my fears.

That being said, I must acknowledge the possibility that Canada and Australia may prove me wrong. And I will be happy if that’s what happens. Both nations have done a pretty good job of restraining the growth of government (see Table 25 of this OECD data), and I don’t see any immediate threat of VAT hikes. But I’m not holding my breath for what happens 10 years from now.

Last but not least, I’ve decided the title of this post is inaccurate. The left isn’t wrong. They know the higher taxes lead to higher spending, and they know the VAT is a money machine for big government. They just don’t publicly admit these are the results they want.


Daniel J. Mitchell

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.
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