Lawmakers debate surtax to pay for war

WASHINGTON — Abraham Lincoln levied the country's first income tax to help pay soldiers and buy rifles for the Civil War.

Franklin Roosevelt raised taxes as well, to help pay for World War II.

Lyndon Johnson tacked a temporary 10 percent surtax on top of normal income taxes to help pay for the Vietnam War.

Now, as President Obama prepares to send tens of thousands more U.S. troops to the eight-year-old war in Afghanistan, the pending escalation is raising the question of how the country should pay the growing bill.

Some top Democrats in Congress propose a surtax starting in 2011. Conservatives call it a political ploy from lawmakers who felt no need to raise taxes to pay for things they wanted, such as the economic stimulus package. Economists say that more tax increases could hurt the economy just as it starts to rebound.

Obama hasn't said what he wants to do. He has, however, signaled that he no longer can afford — economically and perhaps politically — to simply add the cost of the war to the soaring federal debt, as his predecessor did.

For the first time in nine meetings over months of deliberations on the Afghanistan strategy, Obama on Monday invited Budget Director Peter Orszag to sit in, a sign that the White House was weighing the budget consequences of a troop surge that could cost a trillion dollars over 10 years.

"There is serious unrest in our caucus... can we afford this war?" House Speaker Nancy Pelosi, D-Calif., said in a Tuesday conference call with economists. "We have to look at that war with a green eyeshade on."

The U.S. historically has four ways to pay for a war, according to the Congressional Research Service: raise taxes, cut other spending, borrow or print more money.

So far, the wars in Afghanistan and Iraq have been financed by borrowing.

Now, a group of top Democrats led by Rep. David Obey of Wisconsin proposes a surtax to help pay for the Afghanistan war.

"The only people who've paid any price for our military involvement in Iraq and Afghanistan are our military families," said Obey, who's the chairman of the House Appropriations Committee. "We believe that if this war is to be fought, it's only fair that everyone share the burden."

It's not just a matter of equity, though. Obey and other liberals fear that the rising budget pressure created by a $1.4 trillion annual budget deficit and a $12 trillion national debt will squeeze their priorities for domestic spending.

"If we don't address the cost of this war," Obey said, "we will continue shoving billions of dollars in taxes off on future generations and will devour money that could be used to rebuild our economy by fixing our broken health care system, expanding educational opportunities and job training possibilities, attacking our long-term energy problems and building stronger communities. We cannot allow the war to derail that potential."

Obey's proposal would impose a 1 percent surtax on anyone making less than $150,000 a year. He would impose a bigger — and as yet undefined — surtax on those making more.

Conservatives say that Obey's tax proposal can't pass a Congress heading into an election year. They argue instead that Obey and House Democrats are really using it as a political wedge, either as payback to conservatives for demanding that an expansion of health care be paid for, or as a way of opposing an escalation of the war.

"It's dead on arrival. Because of the explosion of domestic spending this year, it's hard for members (of Congress) to say with a straight face that they need to levy a tax to pay for this," said Mackenzie Eaglen, a research fellow at the Heritage Foundation, a conservative policy organization.

"It seems they're using it to pressure the president to not escalate in Afghanistan. It also puts conservatives in a bind by trying to force a debate between war and taxes, both of which tend to be unpopular."