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June 30, 2011
News Analysis: Quack, Quack: Ducks on the March
Joseph J. Thorndike

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Is the GOP going soft on taxes? It seems unlikely, especially given the Republican walkout on Vice President Joe Biden's debt limit talks, ostensibly in response to Democratic tax hike fever. But before House Majority Leader Eric Cantor, R-Va., bailed on Biden, he offered a hint of compromise. "We are not opposed to revenues," he told reporters. "We are just opposed to tax increases."1

That's a pretty slender reed to build a budget deal on. But in these hyperpartisan times, maybe it's enough.

Or maybe not.

Apparent Flexibility

The case for Republican compromise first gathered steam after the Senate's vote last month to repeal the volumetric ethanol excise tax credit. To the surprise of many observers -- and the dismay of tax-pledge enforcer Grover Norquist -- more than a few GOP members signed on for repeal. "At a time when we are borrowing 40 cents out of every dollar that we spend, it is a good time to take a hard look at unwarranted tax breaks, and one appropriate use of those funds is to reduce the deficit," said Sen. Lamar Alexander, R-Tenn.2

That sort of language gets liberals excited (which says a lot about the state of modern liberalism). As Ezra Klein of The Washington Post wrote, "Earlier this week, Senate Republicans voted to close out some ethanol subsidies in the tax code and use the savings to reduce the deficit. That was an explicit signal that they're willing to increase revenues so long as the mechanism is closing loopholes, ending tax breaks and shaving expenditures."3

Derek Thompson of The Atlantic was similarly optimistic. "To some people, this might sound like deliberate Washington gobbledygook, or perhaps a mysterious koan," he said of Cantor's revenue/tax distinction. "But it's really quite sensible. All you do is cut out the $1 trillion of deductions, exemptions, and subsidies in the tax code."

That's all, huh? That's the same "all" that tax reformers have been trying to do for roughly half a century. Shouldn't be too hard to pull off by August 2, right?

Actual Intransigence

In recent days, the green shoots of budding compromise seem to have withered completely. If Republicans were once willing to tolerate revenues flowing from closed loopholes, they don't seem to be anymore. In his news conference last week, President Obama bemoaned the GOP's "maximalist position" of opposing any and all revenue increases, whatever they might be called.4

Republicans, moreover, are happy to explain how they square their absolutist position with Cantor's earlier doublespeak. Here's how Amy Payne of the Heritage Foundation clears things up:

    The dreaded tax hike -- and you know it's dreaded when those who want to raise taxes are working so hard to find a less painful, less obvious way of advocating their position -- is what happens when Congress changes the law to generate more tax revenue from the same people who are already paying. A tax hike just means Congress refused to prioritize, and they want taxpayers to pay for that failure.

    New revenues, on the other hand, can -- and should -- result from economic growth, which is exactly what the U.S. is lacking. The stream of revenue flowing into Washington increases when businesses are successful, when the unemployed find jobs, and when workers get raises. If the President would lift his anti-growth policies, we would see a stronger economy and, yes, "new revenues."5

Eventually Republicans might return to a softer stance. When the clock finally runs out on the debt limit, for instance, the GOP may be willing to revive its linguistic games.

But it's no sure thing. It seems apparent that many Republican lawmakers have no intention of accepting a revenue increase of any kind. And why should they? This isn't the first time that Republicans have tried to soften an ironclad promise to avoid tax increases. And the last time they gave in to that apparently reasonable impulse, it didn't go well for them.

A Checkered Past

The modern history of GOP linguistic gymnastics begins with Ronald Reagan, who famously began his presidency with a dramatic tax cut. The Economic Recovery Act of 1981 gave conservatives (and especially supply-siders) a huge victory.

Before the ink was even dry on the bill, however, Reagan was floating plans for a tax increase. Except he wasn't calling it that. "The administration, carefully attempting to avoid any implication that it would raise taxes, described the proposals as an effort to 'curtail certain tax abuses and enhance tax revenues,'" explained The Washington Post.6

Reagan's attempt to rebrand his tax increases as "revenue enhancements" did not go unnoticed. "They've all sold out, every one of them," complained Jude Wanniski of Reagan's economic advisers.7 As one of the nation's most prominent supply-siders, Wanniski was particularly angry with David Stockman, director of the Office of Management and Budget. In December Wanniski wrote an acerbic indictment of Stockman, damning him for his tax apostasy.

The New York Times quickly tracked down the source of Reagan's new tax terminology. "The Reagan Administration's fiscal euphemist has been run to ground," the paper reported. "He is Lawrence A. Kudlow, who says he coined 'revenue enhancement,' the euphemism for tax increase used by the White House last month."8

The Times described Kudlow as unrepentant -- and still hard at work on rhetorical gamesmanship. "I gave them another one, 'receipts strengthening,'" Kudlow told the paper in a moment of very un-Washington candor. "There's no better way to sell economic theory than by the euphemistic route."9

According to Wanniski, incidentally, Kudlow got the "revenue enhancement" phrasing from Edwin Yeo, undersecretary of the Treasury during the Ford administration.

Many loyal Reaganites -- and even some supply-siders -- embraced the new distinction. Taxes "are not revenue enhancers," declared Rep. Jack Kemp in a typical comment.10

Still, Kudlow's creation didn't fool most observers. "The Reagan Administration calls it 'revenue enhancement,' but the ranking Republican on the House Ways and Means Committee, Rep. Barber B. Conable Jr. of upstate New York, calls it 'raising taxes' and says he is against it," reported the Times.11

Reagan himself tried to defend the rhetorical shift. The difference was that revenue enhancements came from closing loopholes, not raising rates or imposing new levies, he said. As he told a group of newspaper editors in March 1982:

    If you'll remember, we discussed last year that I am willing to look at the tax structure for those places where, maybe, there are people getting unintended and undeserved tax breaks who should be -- in other words, I hate to use the term that was given birth last year and then everyone thought it was a euphemism for tax increases, but, no, when I said, "revenue enhancements," well, we were talking about this thing. You know, to -- I just read as late as today that it is estimated that $95 billion is lost in tax revenues every year. Well, that's as much as they're talking about for the whole deficit.12

Disingenuous or not, Reagan's euphemism may have helped. The administration championed (or at least tolerated) a series of tax increases beginning in 1982 and continuing for several years. The efficacy of Reagan's rhetorical innovation prompted one libertarian to describe it as "a nice touch of creative Orwellian semantics."13

Quacking Up

Reagan's tax hikes may have seemed like a reversal of the antitax stance he defined so clearly during the 1980 election. But the Gipper's rhetorical shift gave him some wiggle room. His successor, by contrast, had none. During the 1988 presidential campaign, GOP nominee George H.W. Bush invited Americans to "read my lips: no new taxes." Good politics, but poor policy. And, ultimately, poor politics anyway.

In case Bush's tax promise wasn't tight enough already, his nominee to head the OMB ratcheted it up during confirmation hearings. Asked by senators whether Bush's pledge applied to any sort of revenue increase, whether dubbed a tax or something else, Darman offered his famous duck test. "If it looks like a duck, walks like a duck, and quacks like a duck, then it is a duck," he told the Senate Governmental Affairs Committee.

Pretty clear. But ultimately not clear enough to prevent Bush from agreeing to a deficit reduction deal in 1990 that included a flock of loud, squawking water birds.

Standing Firm

Bush's abandonment of his antitax pledge has gone down in history as a classic blunder. Many blamed it for his loss in the 1992 election. As a result, Republicans today (or at least those with a conception of history that does not begin and end with mystical invocations of the Founding Fathers) are determined to avoid repeating this mistake.

Reagan's euphemism, meanwhile, has lost its Orwellian aura. Instead, it's become a standard element of Washington jargon, embraced by both parties and usually used to mean, roughly speaking, any sort of new revenue that comes from closing a loophole.

As such, of course, revenue enhancement no longer serves its euphemistic purpose. For a Republican Party more or less committed to the proposition that any new revenue derived from legislative action (as opposed to strictly economic growth) is a tax increase, a revenue enhancement is, quite simply, a tax increase.

Which isn't surprising, because euphemisms are inherently perishable. As journalist Otto Friedrich wrote in Time magazine more than a quarter-century ago: "One of the oddities of euphemisms, though, is that they tend to reacquire the unpleasant connotations of the words they supplant, like a facelift that begins to sag, and so they have to be periodically replaced."14

So when it comes to tax increases and their rhetorical description, what's the new new thing? It might be "revenue savings." Cantor suggested as much while complaining about Democratic interest in raising taxes. "You look at the value of the so-called revenue savings or revenue enhancement there, versus what we're talking about, trillions, you have to sort of wonder -- is this about policy and substance, or is this about politics?" he said.

Similarly, a reporter used "revenue savings" at a June 27 White House press briefing to describe tax increases. "So is it fair to say that this issue of a balanced approach, including increased tax revenue savings, tax increases, however you want to frame that, that's a red line for the White House?" he asked.15

"Revenue savings" isn't exactly new, having been used for some time to describe revenue recouped from a closed or narrowed tax preference. That's how my colleague Martin A. Sullivan used it in a 2007 article: "Early in 2006 President Bush called for the repeal of two petroleum-related tax breaks that his administration initially supported as part of the 2005 energy bill, but the total revenue savings from repeal would be only $1.5 billion over 10 years."16

Lately, however, left-leaning voices have used revenue savings to describe tax changes that do more than close loopholes. For instance, it seems to apply to rate increases, at least in some circumstances. Citizens for Tax Justice recently observed that "if enacted in 2011, 84 percent of the revenue savings from Obama's plan to partially end the Bush income tax cuts would come from people whose income exceeds $1 million annually."17

Boy, that sure sounds like a tax increase to me. As I'm sure it does to anyone enjoying provisions of the Bush tax cuts that would disappear under the Obama plan.

Quack quack, I say. And I'm all for it. Candor is its own reward, so the sooner we all start quacking, the better off we'll be.


1 Richard E. Cohen, "GOP Eyes Tax Breaks, Loopholes," Politico, June 20, 2011, available at

2 Andrew Restuccia and Ben Geman, "Overnight Energy: Sen. Alexander Readies Plan to Strip Energy Subsidies," The Hill, June 16, 2011.

3 "Wonkbook: Dealmaking Time on the Deficit?" The Washington Post, June 17, 2011.

4 See White House transcript of the president's press conference (June 29, 2011), Doc 2011-14390, 2011 TNT 127-30; for related coverage, see p. 17.

5 Amy Payne, "Semantics: 'New Revenues' v. Tax Increases," Heritage Foundation, available at"new-revenues"-v-tax-increases.

6 Thomas B. Edsall, "Administration Plans Tax Liability Increases; Tax Liability Increases Being Explored," The Washington Post, Sept. 25, 1981, at D8.

7 David Beckwith et al., "Reaganomics: Too Many Voices," Time (Oct. 19, 1981).

8 "A Euphemist Takes a Bow," The New York Times, Oct. 21, 1981, available at

9 Id.

10 I. Willis Russell and Mary Gray Porter, "Among the New Words," 58 Am. Speech 363 (Winter 1983).

11 Edward Cowan, "Bids to Raise Revenues Expected in Congress," The New York Times, Oct. 19, 1981, at D1.

12 Ronald Reagan interview in New York City with members of the editorial board of the New York Post (Mar. 23, 1982).

13 Murray N. Rothbard, "The Reagan Phenomenon," Free Life, Vol. 4, No. 1 (undated).

14 Otto Friedrich, "Essay: Of Words That Ravage, Pillage, Spoil," Time (Jan. 9, 1984).

15 Press briefing by White House press secretary Jay Carney (June 27, 2011); see Pierson, supra note 4.

16 Martin A. Sullivan, "Economic Analysis: Inequality, Populism, and Democratic Tax Policy," Tax Notes, Jan. 8, 2007, p. 16, Doc 2007-375, or 2007 TNT 6-4.

17 Citizens for Tax Justice, "People Who Make $250,000 Should Stop Worrying: Obama's Income Tax Plan Targets Those Who Make Over $1 Million" (May 19, 2011), Doc 2011-10999, 2011 TNT 99-72.