In the 1819 Supreme Court case McCulloch v. Maryland, Chief Justice John Marshall famously propounded that “the power to tax involves the power to destroy.”
Most of the discussion of the “power to tax” in the last few years has involved Chief Justice John Roberts’ controversial finding that Obamacare’s penalty for not purchasing health insurance was perfectly okay because it fell under the taxing power of the federal government. But the real impact of the power to tax is about to be felt as Congress approaches the moment of decision on infrastructure and the Senate’s budget reconciliation process.
You thought the filibuster was complicated? The filibuster is at least consistent with the original purpose of the Senate, which is to be the “cooling saucer of democracy,” as George Washington supposedly said to Thomas Jefferson.
But the reconciliation exception, which is not in the Constitution, turns the Senate’s design on its head. Because of the filibuster, 60 votes are needed to end debate in the Senate, including for something as pedestrian as naming a post office. But because the reconciliation process creates an exemption to the filibuster, the Senate can spend trillions of dollars with a simple majority vote.
Why does it require fewer votes to spend trillions of dollars than it does to name a post office? Because the rules are rigged toward ever bigger government. Instead of the Senate performing its designated role as a bulwark against runaway populist sentiment (see the House of Representatives), its absurd reconciliation rules mean the Senate can spend money with the best of them.
It’s impossible to dispute the strength of the economy from 2017 through 2019 under Donald Trump. And while there may have been more than one reason, it’s certain that the business and personal tax cuts were a major factor in an economy that had the lowest rates of unemployment on record. Absent a 100-year pandemic, it’s reasonable to assume such economic strength would have continued.
But now the Democrats, who barely control Congress, are planning to ram through huge new tax increases, spending increases, and new regulations. Their plan is to move the so-called “bipartisan infrastructure compromise” through first, and then force everything Republicans refused to support in the infrastructure bill through on a party-line vote under reconciliation. And the Senate rules will let them do it.
But Republicans should not let them do it. If Democrats get their way, the higher taxes and spending will wreck the economy. Republicans should maintain their leverage by insisting on any reconciliation vote first, and only thereafter agree to an infrastructure bill. To do otherwise is to be complicit in the destruction of the economy through the power to tax.