O'Neill, our treasury secretary, breathes clean air and has clean
thoughts, and the response to them is Orwellian.
have not seen what Jay Leno and Mr. Letterman et al. will be doing
to him in the days ahead, but he will be made to sound like the
Neanderthal Man, arriving on the scene in his Lexus, having escaped
from all socially liberating thought since the Industrial Revolution.
What Mr. O'Neill said was that he thought it quite wrong to conduct
economic policy in a "robber baron" rhetorical context in which
attention is given to who gets what after tax reform. "I think it
is really corrosive to have this argument
. It's not worthy
of where we are."
The allure of ad hominem arguments is as ever irresistible. The
news accounts tell us that Paul O'Neill made $59 million in salary
and stock options last year, from which we are supposed to deduce
that he is especially inclined to favor rich taxpayers. To be sure
a few will reflect that the experience of a man who brought about
the reformation of an entire industry (aluminum) is worth much more
to the United States prospectively than the $59 million paid to
its chairman. But on one matter, attention needs to be paid. It
is: Should heavy emphasis be given to the incidence of reform taxation?
Or merely to the economic impact of it?
Robert Greenstein of the Center on Budget and Policy Priorities
was shaken by what he saw as the implied consequences of Mr. O'Neill's
criticism. "You have to allow a conversation about who would get
the benefits of various tax-cut proposals without being accused
of waging class warfare." Yes, but the mode in which such discussion
is conducted is readily seen as such when the effort isn't to analyze
disinterestedly, but to curry resentment. And the same day that
we heard from Mr. Greenstein, we heard from Senate minority leader
Daschle just the kind of thing Mr. O'Neill is getting at: Mr. Daschle
said the rich are getting richer, the poor poorer. But that has
nothing at all to do with the question whether the proposed tax
reform is desirable.
It isn't as though Mr. Bush proposes to tax the poor more
heavily. The taxation of the poor is already heavy, but it is done
not through income taxes but payroll taxes, and neither Al Gore
nor Ralph Nader proposed reducing those, given the shortfall in
sight 25 years from now on Social Security payments.
Smith and Milton Friedman prescribe policies aimed at
increasing wealth and freedom. Paul O'Neill is a disciple.
No, Mr. Bush proposes to cut from 15 percent to 10 percent on the
first $6,000 in taxable income for singles and to double the child
tax credit and reduce the marriage penalty. The tax rate on low-income
families would be reduced by 40 percent; a family of four making
$35,000 would get a 100 percent tax cut.
And so on. But Mr. O'Neill is calling attention to large trajectories,
which have to do, of course, with growth. It was splendid to hear
him say what he did about the corporate income tax, which some of
us in the past have identified as a tax purely demagogic in character,
done mostly for the purposes of relative ease of collection. Mr.
O'Neill said he thought it "goofy" in the language of the
Washington Post's Steven Pearlstein and Paul Blustein
to tax corporations that "simply pass the tax on to consumers in
the form of higher prices." That happens obviously: Corporations
don't pay taxes, their clients do; corporations don't make a gift
of 7.65 percent of your salary in Social Security tax; the money
would be yours in higher wages if the corporation weren't sequestering
it as a fake contribution to the employee. And O'Neill said that
of course that tax led "to the creation of a small but well-paid
army of lobbyists and tax accountants whose unceasing efforts to
create and exploit loopholes distorts corporate decision-making
and serves as a drag on economic growth and efficiency."
But the high moment was yet to come. He closed by saying, "It's
just annoying to me that people have all these damned excuses"
for putting off transparently beneficial tax reform. He said that
in the corporate world, something like this would be taken care
of in a matter of weeks.
A month or so ago, an Internet poll gave off the names of the "Top
10 Economists on the Net": No. 1. Karl Marx. 2. Adam Smith. 6. John
Kenneth Galbraith. 9. Milton Friedman. A second poll: "The Top Ten
Living Economists on the Net": 1. John Kenneth Galbraith. 2. Milton
This really tells it all. Karl Marx was not an economist; he was
a social revolutionary. J. K. Galbraith is correctly deemed tops
in influence, but his influence is that of a social-policy advocate
and philosopher. Mr. O'Neill has highlighted these differences.
Adam Smith and Milton Friedman prescribe policies aimed at increasing
wealth and freedom. Paul O'Neill is a disciple.