By contrast, President Bush has coupled sacrifice on the battlefield with self-indulgence at home. As critics are fond of pointing out, he is the first American wartime leader to champion sweeping tax cuts in the face of a sustained military commitment.
Seeking to underscore Bush's break with fiscal tradition, some observers have looked to the Vietnam War. In 1967 President Lyndon Johnson asked Congress for a special wartime surcharge on individual and corporate income taxes, citing the need to stem inflation and limit deficits. During a recent panel discussion, Isabelle Sawhill of the Brookings Institution and Maya MacGuineas of the New America Foundation both endorsed a similar levy to help pay for the war in Iraq and brighten the nation's gloomy fiscal forecast.
So what, exactly, was the Vietnam surtax? And does it deserve a place in the pantheon of home-front sacrifice?
In the abstract, new revenue might have bolstered Johnson's case for trying to have it all, but the politics of fiscal policy ran in the opposite direction. Johnson believed that any tax increase would endanger his cherished social programs, prompting a conservative backlash against the Great Society. As historian Julian Zelizer has observed, LBJ understood that "all hell will break loose on our domestic programs" once plans for a tax increase reached Capitol Hill.
Johnson's economic advisers continued to insist, however, that some sort of tax increase was imperative. Emphasizing the dangers of war-borne inflation, they gradually convinced the president. In January 1967 Johnson asked Congress to approve "a sensible course of fiscal and budgetary policy," including a 6 percent surcharge on personal and corporate income taxes. The special levy, designed to help pay for the war, would last a maximum of two years -- less if swift victory allowed U.S. forces to withdraw sooner. The surcharge, which administration experts expected to raise $4.5 billion in its first year, would exempt taxpayers in the lowest tax brackets. And for almost everyone else, Johnson insisted, it would amount to less than $5 extra per month.
Johnson reminded Americans that they owed him one. Recent tax cuts had relieved the burden for almost everyone, but now it was time to give back:
Johnson's most formidable opponent was Arkansas Democrat Wilbur Mills, chair of the House Ways and Means Committee and one of the most powerful members of Congress. An ardent fiscal conservative, Mills was determined to force cuts in discretionary spending. Only then, he told the president, would he agree to any sort of tax increase.
The surcharge proposal went nowhere. For months Mills and Johnson were caught in a standoff, neither willing to compromise. Johnson, moreover, was still reluctant to invest much political capital in the idea, well aware that congressional and public opinion was running against it. Editorials in leading newspapers were skeptical of the need for such a drastic anti-inflation measure. Opinion polls showed scant enthusiasm for any sort of tax increase; many respondents seemed to doubt that new revenue would be used for the war effort, instead of going to finance general expenditures.
By August 1967 Johnson was growing more concerned about the state of the economy, and he renewed his request for a surcharge. Now, however, he was asking for a 10 percent levy, and he embraced the moral rhetoric of wartime self-denial to justify the proposal. "Some may hear in this message a call to sacrifice," he declared. "In truth, it is a call to the sense of obligation felt by all Americans. The inconveniences this demand imposes are small when measured against the contribution of a Marine on patrol in a sweltering jungle, or an airman flying through perilous skies, or a soldier 10 thousand miles from home, waiting to join his outfit on the line."
Despite those impassioned appeals, the surcharge continued to struggle. Johnson was willing to accept limited spending cuts, but Mills continued to press his advantage, demanding deeper, more painful reductions. The turning point came in early 1968 when a growing balance-of-payments deficit raised economic fears to a new height. As historian Robert Collins argued in a valuable analysis of the 1968 crisis, inflation curbs were a central component of the administration's effort to bolster the dollar and stem the depletion of gold reserves.
Egged on by his economic advisers, Johnson acceded to Mills and his conservative cadre on the Ways and Means Committee. The president swallowed a 10 percent reduction in discretionary spending, and Mills gave him the tax surcharge.
Individual taxpayers completed their returns as usual, but a new line appeared on Form 1040. After entering tax due on line 12a, an individual taxpayer was prompted by line 12b to consult a special surcharge table and add the appropriate amount to his or her regular tax liability. For tax year 1968, the surcharge amounted to 7.5 percent of a taxpayer's regular tax liability. (The 10 percent levy was prorated since it was in place for only nine months of the calendar year.) For corporations, the process was similar: A new line on Schedule J of Form 1120 required companies to add 10 percent to their regular tax bills (or a prorated amount, depending on the corporation's tax year).
In 1969 Congress renewed the surcharge through the middle of 1970 but reduced it to 5 percent. Still, the tax raised substantial revenue -- some 55 billion in constant 1992 dollars, according to a 2003 Treasury Department estimate. As legal scholar Kirk Stark pointed out in a paper examining Vietnam War tax policy, "The importance of the 1968 legislation to the U.S. budget situation in the late 1960s should not be underestimated."
Feel free, however, to underestimate its efficacy as an anti- inflation device. Skeptics at the time predicted that the surcharge would fail to stem consumer spending -- and not simply because it took so long to enact. In a critical article in 1971, economist Robert Eisner said temporary taxes were ineffective curbs on consumer spending. And according to Charles Steindel of the Federal Reserve Bank of New York, who has written on the effect of tax changes on consumer behavior, subsequent analysis has borne that prediction out. Inflation continued to rise throughout 1968, 1969, and the early 1970s.
But any similarity ends there. Bush has remained implacably opposed to any sort of tax increase -- apparently convinced, as Rep. Tom DeLay, R-Texas, declared in 2003, that "nothing is more important in the face of a war than cutting taxes." Johnson, by contrast, was ultimately willing to face the fiscal music, convinced that unbalanced budgets would undermine not just the war, but his social priorities, too.