Taxing wars the american way of war finance and the decline of democracy

TAXING WARS TAXING WARS The American Way of War Finance and the Decline of Democracy SARAH E KREPS Oxford University Press is a department of the University of Oxford It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide Oxford is a registered trade mark of Oxford University Press in the UK and certain other countries Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America © Oxford University Press 2018 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer CIP data is on file at the Library of Congress ISBN 978–0–19–086530–6 eISBN 978–0–19–086532–0 CONTENTS Acknowledgments Introduction Bearing the Financial Burden of War Partisan Politics in the Early Wars: Conflicts of 1798, 1812, and 1898 The “Liberty Bond” Approach to War Finance: World Wars I and II From Taxation to Borrowing: Declining Fiscal Sacrifice in Korea and Vietnam “Hide-and-Seek” Wars: The Afghanistan and Iraq Wars Cross-National Survey Evidence from the United States, the United Kingdom, and France Conclusion Appendix Notes Index ACKNOWLEDGMENTS During graduate school, I worked as a US Air Force reservist at the National Reconnaissance Office (NRO) The NRO had obtained mythical status in my mind because it dealt with space, satellites, oodles of secret money, and spooks from the Central Intelligence Agency One of the first people I met working at the NRO was a former non-official cover officer As he quickly told me, he was the kind of CIA agent who would be killed without question if anyone in the field discovered his identity And as with most people in the intelligence business, he was dispositionally paranoid One clear manifestation was that he came to work every day with ten $100 bills rolled and squirreled away in various parts of his body and clothes It was a habit, he said, that he had picked up in case he needed to bribe his way out of a dangerous situation He had been unable to shed the practice even though we worked in the leafy suburbs of northern Virginia A somewhat more useful nugget he dispensed to his amateur colleague was how to evade questions about the classified nature of his work He said that when people asked what he does, he said he is a tax specialist The response would shut down further questions because no one would ever want to talk more about any intricacies of taxes I nodded in agreement, because I thought for a long time that people didn’t want to discuss taxes I no longer agree, and I hope that the reader of this book does not either Taxes, I realized, are not just an economic tool They are inherently political Of course, I had known this as early as grade school when we were taught about the Tea Party Massacre and the origins of the American Revolution, but as an adult, it seemed like taxes were simply something onerous we dealt with in April of every year I started to reevaluate this belief one day when I was talking to a Cornell colleague of mine in comparative politics, Gustavo Flores-Macías He was studying the security taxes levied in Colombia to fight the guerrilla war, and I started to dig into the United States experience It turned out the United States had not levied a war tax since the Vietnam War, and I wondered why that practice had changed and what the consequences might be My colleague and I collaborated on a couple of articles on war taxes, one of which appeared in the American Political Science Review and another in the Journal of Conflict Resolution, but it seemed like a book manuscript was in order that would allow me to write more systematically about the American experience with paying for its wars This book is the product of that research It was a long time in coming, as I briefly detoured to write a couple of books on drone warfare, which I came to realize was actually a related story The United States has increasingly worked to shield its population from the costs of war not just in blood, through the use of drones, but also in treasure, by avoiding war taxes and financing its conflict through debt A long-established tradition of democratic theory suggests that a key difference between democracies and non-democracies is that a democratic populace bears the direct costs of war in blood and treasure The more directly they bear those costs, the more incentives they have to pressure leaders to keep wars short and low cost My normative concern with this project was the inverse of this logic If individuals no longer saw the costs of war, would they be less politically engaged with the cost, duration, and outcome? The study suggests that the answer is yes Beginning in 2001, the United States began a war against AlQaeda that morphed into a war against unrelated militants in east Africa, north Africa, and Yemen President Obama campaigned on winding down the wars in Afghanistan and Iraq, only to wind them back up In 2014, he began a war against the Islamic State in Syria and Iraq Legislators have been relatively silent on each of these fronts because their constituents are silent The constituents are silent because they are shielded from the costs of war Accountability linkages have correspondingly unraveled Debt levels rose as the sense of fiscal propriety that characterized prior wars failed to emerge from the public, quite a different attitude from the one expressed by Woodrow Wilson: “Borrowing money is short-sighted finance We should pay as we go The industry of this generation should pay the bills of this generation.” As I worked through the research on the book, I incurred a number of—pardon the pun—my own debts I am grateful for funding from the Institute for Social Sciences at Cornell, which funded an early experiment I conducted with Gustavo Flores-Macías The Koch Foundation provided a generous grant that allowed me to fieldwork in the United Kingdom, Italy, and Germany to expand my cross-national perspective The generous Appel fellowship allowed me to spend my sabbatical year in Spain while I finished drafting and editing the manuscript I also appreciate the feedback I received on various aspects of the research, including comments from participants in seminars at the University of California-Berkeley, Binghamton University, Duke University, North Carolina State University, Rutgers University, and the University of North Carolina at Chapel Hill I would also like to thank participants at the Costs of War workshop at Cornell, as they helped move along the ideas for the book in its early stages, and my own book workshop, also at Cornell, whose participants helped finesse the argument and empirics toward the final stages A number of individuals provided helpful feedback along the way In particular, I would like to thank those who took the time to provide written or verbal comments: Mariel Barnes, Richard Bensel, Marc Blythe, Jon Caverley, Malcolm Chalmers, Debak Das, Nisha Fazal, Peter Feaver, Gustavo Flores-Macias, Ben Fordham, Lawrence Freedman, Aaron Friedberg, Jonathan Kirshner, Peter Katzenstein, Tamir Libel, Paul MacDonald, Paul Newman, Dan Reiter, Condoleezza Rice, Sten Rynning, Elizabeth Saunders, Ken Schultz, John Schuessler, Nic Van de Walle, Karin von Hippel, Kyle Wolfley, Amy Zegart, and Micah Zenko My thanks also go to Dave McBride at Oxford who heard an early pitch of the book several years back, had thoughtful suggestions about the argument, and then helped shepherd the work to its final publication Last, none of this would have been possible without the support and love of my family: my parents, Gustavo, and my kids, Luke and Sebastian I dedicate this book to them, but especially to my dad, who died suddenly as I finished final edits and until that last day thought his taxes were too darn high TAXING WARS Introduction the attacks of September 11, 2001, President George W Bush famously stood in New York City in the rubble of the destroyed World Trade Centers, held a bullhorn, and said, “I can hear you, the rest of the world hears you, and the people who knocked these buildings down will hear all of us soon.”1 In the days that followed, he also urged Americans to “get down to Disney World in Florida take your families and enjoy life, the way we want it to be enjoyed.”2 Americans, he urged, should not hunker down and make gestures of sacrifice but return to normalcy Consistent with this tone, the government cut taxes; and efforts to introduce a “share the sacrifice” war tax to pay for military action in Iraq in 2007 and Afghanistan in 2009 in response to the attacks were restricted to political theater of renegade anti-war members of Congress.3 Responding to these war tax proposals, Representative Jerry Lewis (R-CA) said that Americans were “already being taxed to death” and would be hostile toward any type of new tax, including a war tax Democrats themselves “ran away from this idea as fast as you can say the words ‘Republican majority.’  ” The result is that the government has financed the wars in Iraq and Afghanistan entirely through borrowing Financing these recent wars through debt could not have been more different from earlier experiences when wars meant taxation In 1914, three years before America’s direct involvement in World War I, President Wilson urged war taxes as a way to fund defense preparations: “Borrowing money is short-sighted finance We should pay as we go The industry of this generation should pay the bills of this generation.”6 Despite trying to gain the American people’s acquiescence to enter the war and later to maintain their support throughout the war, the Wilson administration levied a series of war taxes before, during, and after the war, amounting to about one-third of the war’s costs The public was no less deterred from the war or war taxes at that time than they had been in the SpanishAmerican War, when editorials proclaimed that the populace would “cheerfully pay the cost” in war taxes.8 Why, when Wilson was aiming to recruit support for the war from a reluctant public, did he introduce measures such as a hefty war tax that recent leaders have considered politically toxic? Why was the public so magnanimous in its willingness to contribute its own resources? By contrast, why did recent leaders not use the crisis of war, often employed as the entrée for introducing war taxes, in the aftermath of 9/11 to extract resources from the populace in a way that had been customary in the past? More generally, what explains shifting attitudes toward bearing the financial burden of war, moving away from war taxes—and the consequences of that shift? In this book, I argue that the starkly different approaches are the result of public attitudes toward wartime fiscal sacrifice that vary depending on the underlying type of war and state-society relations, in particular the role of taxation in the nation’s social and political life (discussed in more detail in chapter 2).10 As Scarlett O’Hara said in Gone with the Wind: “Death, taxes and childbirth! There’s never any convenient time for any of them.” But there are less inconvenient times than others That innate antipathy toward the inconvenience of taxation can be dislodged by certain types of wars and IN THE DAYS AFTER state-society relations When these factors combine to make the public cost sensitive, leaders have pursued forms of war finance that anticipate opposition and minimize constraints on the way they use force In the post-1945 world, the public has become almost uniformly unforgiving of fiscal sacrifice, which explains leaders’ increased tendency to rely on less visible forms of finance such as borrowing Leaders have, in turn, increasingly operated without the decision-making constraints that were in play in many earlier wars when individuals were more directly involved in the costs of war It is no surprise that American wars since that shift in the latter half of the twentieth century have become increasingly costly and protracted, an observable implication of the unraveling link in accountability between legislators’ decision making and the public’s financial burden that democratic theorists have long believed distinguishes democracies from non-democracies when it comes to the conduct of war War Finance and Democratic Accountability The direct connection between the populace and the burdens of war underlies many of the theoretical checks and balances thought to characterize democratic restraint in conflict Immanuel Kant suggested that if the consent of the citizens is required in order to decide that war should be declared (and in this constitution it cannot but be the case), nothing is more natural than that they would be very cautious in commencing such a poor game, decreeing for themselves all the calamities of war Among the latter would be: having to fight, having to pay the costs of war from their own resources.11 As bearing the costs of war should constrain the public and in turn its leaders, this lies at the heart of institutional arguments associated with the democratic peace: Since “the people ultimately pay the price of war in higher taxes and bloodshed,”12 they are more sensitive to the costs, in turn curbing leaders’ ambitions in conflict The statement about the costs of war and the populace is grounded in several assumptions: that the direct, visible costs of war are passed along to the citizenry in a democracy; that bearing the costs of war is generally unpopular and will make the people judicious about the use of force; and that they have electoral recourse and can register their displeasure with a particular policy—for example, if a leader carries out a costly war—at the ballot box The implication is not that democracies will not engage in war It is that since individuals bear the burden, they are sensitive to those costs and put pressure on leaders to keep wars short and low cost Coupled with the electoral checks embedded in a democracy, the costs of war contribute to, as Michael Doyle labeled the Kantian claim, “republican caution—Kant’s ‘hesitation’—in place of monarchical caprice.”13 The cost-sensitive democratic populace will tend to moderate leaders’ ambitions in the conduct of war Such institutional constraints are not a given, however Democratic leaders have found ways to sidestep or minimize cost-related public opposition that would check their conduct in war For example, although the public is thought to be averse to casualties, 14 other arguments suggest that people are willing to tolerate high casualties for the prospect of a successful war 15 Elite discourse, then, can go some way toward mitigating the adverse effects of casualties, emphasizing the prospect of victory and potentially relaxing some of the checks and balances that were thought to be embedded in democratic institutions.16 Perhaps more fundamentally, leaders have found ways to minimize the cost in blood altogether They have eliminated conscription, thus creating far more localized rather than diffuse consequences as eighteenth-century power and Quasi-War See Quasi-War (1798) financial aid to United States in Revolutionary War, 55–56 income taxes as progressive and targeting the wealthy, 200–201 public willingness to pay war taxes, 13, 198–201, 199t, 220 Syrian operations, fiscal sacrifice and tax to finance, 198–201, 199t tax revenue as share of GDP, 189, 189f terrorist attacks (November 2015), 197 text of survey questions, 249–250 in Vietnam, 121–122 XYZ affair and, 59, 63 Freedman, Lawrence, 26, 195 French and Indian Wars, Friedberg, Aaron, 7, 165, 221 Friedman, Milton, 95–96, 216, 217 Fries Rebellion, Fulbright, J William, 135 Gaddis, John Lewis, 109, 111 Gallatin, Albert, 64–65, 66 Gallup, George, 96 Gallup polls on Afghanistan War, financing of, 153 on balancing budget as priority, 95 on Iraq War, 162 on Korean War taxes, 116–117 on progressive taxes, 200 on Ruml Plan (1942/3), 104 on taxation as anti-inflation device, 96 on tax rates, 22–23, 275n113 on Vietnam War, 124–125 on World War II sacrifices as justified, 98–99 Garon, Sheldon, 218 Gates, Bob, 169, 171 Gates Commission (1969), 216 George III (King), George, Walter, 119 Germany, 219 See also World War I; World War II GI Bill, 21 Gilpin, Robert, 260–261n58 Gingrich, Newt, 151 Gladstone, William, 17 Goldsmith, Benjamin, 21 Goldsmith, Jack, 177, 222 Gone with the Wind, Goodwin, Doris Kearns, 125 Gowa, Joanne, 43, 255n34 Graham, Lindsey, 156 Great Society programs (Johnson administration), 108, 125, 128, 130, 132–133, 136–137 Greece, 219 Gregory, Thomas, 78 Guardian on British defense spending, 197 Gulf War (1991) See Persian Gulf War Guns-butter trade-off, 108, 118, 125–127, 131, 142, 149, 212–214 See also Social welfare programs in Europe, 219 in Israel, 204f, 204–205 in United Kingdom, 195–196 Hadley, Stephen, 169 Haitians, war with, 26 Halberstam, David, 124 Hamilton, Alexander, 8, 30–31, 55–57, 59–61, 74 Hamilton, Lee, 163 Harding, Warren G., 93, 94 Harris survey on Johnson’s policies, 126–127 Health care, public favoring government support for, 164, 213–214 Heaney, Michael, 171 Heclo, Hugh, 39 Heller, Walter, 132 Hickey, Donald, 64, 66 Hicks, George, 57 “Hide-and-Seek” wars, 5, 43, 47, 48, 50, 51, 74, 121 See also Afghanistan War; Iraq War; Vietnam War High-tech war, 45 Ho Chi Minh, 121 Hollande, Franỗois, 13, 198 Hoopes, Townsend, 125 Hoover, Herbert, 95 House Ways and Means Committee See Ways and Means Committee Houston, David, 34 How to Pay for the War (Keynes), 179 Hoyer, Steny, 153 Hussein, Saddam, 150, 161, 209 Impressment of American sailors by British, 63 Income tax 1917 rates for World War I funding, 88–89 as defense taxes in early 1940s, 99–100 earliest years of, 34, 47 fiscal debates since World War II dominated by, 73 Korean War and, 119 post-World War II levels, 35 Ruml Plan (1942/3) and, 104 UK introduction of, 16 unconstitutional (1894), 71–72 US introduction of, 31, 33–34 wealthy paying majority share of, 94–95 World War II levels of, 98–99 India, 11, 180, 202–204, 207, 220–221 Inflation, 79, 96, 120, 131–132, 135–136, 205–206 Insensitivity to war taxes See Cost sensitivity or insensitivity Intergenerational equity and tax increases, 148, 166 International comparison See Cross-national survey Investment Bankers Association of America, 98 Iraq Liberation Act (1998), 161 Iraq Study Group, 163, 167 Iraq Veterans against the War, 157 Iraq War, 160–178 background to, 160–161 compared to Afghanistan War, 144, 157, 166 compared to Vietnam War, 4, 142, 167 compared to World War II, 142, 209–210 consequences of war without direct financial costs, 169–174 cost of, 6t, 141, 145f, 166–167, 174, 177 financing of, 1, 51 government expenditures associated with, 16f intractable war scenario in, 162–163, 212 ISIS and, 176 minimizing burden of war, 165–169 nature of war and nature of state capacity, 44f no-fly zones and, 160–161 Obama’s promise to end, 174–178 protests against, 169–171 public confusion and ignorance over, 163, 167, 176, 210 public support, fall-off in, 161–163, 167 reconstruction financing and, 166 as small war against insurgents, 26 state-society relations and, 163–165 status of forces agreement and, 173 surge in (2007), 161, 172–173 tax proposed to support, 141–142 UK debt incurred from, 195–196 US casualties, 174 ISIS (Islamic State), 176–177 Islamic State in Iraq and the Levant, 143 See also ISIS Israel and defense spending, 11, 180, 204f, 204–206, 207, 220 Italy, 219 Jay Treaty, 58 Jefferson, Thomas, 30, 57, 60, 62–63, 65 Jeffersonians/Jeffersonian Republicans, 57–58, 62, 64–66, 68, 73 Jobs and Growth Tax Relief Reconciliation Act (JGTRRA, 2003), 164 Johnson, Lyndon B See also Great Society programs; Vietnam War attempt to avoid war taxes, 110, 130–131, 138 borrowing to finance war and, 51 foreign policy and, 125–126 lessons from Korean War and, 121, 123 liberal agenda of, 125–126 as model for future leaders to avoid tax increases, 150 public opinion as influence on, 127–134 State of the Union address (1968), 133, 136 Vietnam War surtax and, 5, 51, 108, 131, 132–134, 137 Kant, Immanuel, 3, 14, 222 Kargil War (1999), 202 Kean, Robert, 114 Keane, Jack, 152, 167 Kennedy, John F., 24, 36–37, 122, 125, 131, 132 Kennedy, Paul, 42 Kennedy-Johnson tax cuts (1964), 36, 131 Kerry, John, 173 Keynes, John Maynard, 179–180, 197, 199, 206 Khrushchev, Nikita, 111 Kitchin, Claude, 84–85, 91–92 Korean War, 5, 51, 110–121 background to, 110–111 borrowing approach to financing, 138 compared to World Wars I and II, 117 cost of, 6t fiscal sacrifice and war taxes, changing attitudes about, 51, 108, 116–118, 120, 137, 167, 214 government expenditures associated with, 16f historical polling of American support for, 228–229t limited war and limited sacrifice, 111–114 “pay as you go” war finance approach of, 119 public opinion and, 113–114, 117–121 Rangel on, 141 social welfare state of 1950s and, 114–116 as transition between large-scale war/low state-capacity world, 48, 51, 108 unclear goals of, 112, 118 Korteweg, Rem, 219 Kucinich, Dennis, 159 Lafayette, Marquis de, 55 Laird, Melvin, 216 Lamothe, Dan, 177 Large-scale wars, 8–9, 25–26, 255n30 decrease in occurrences of, 206 fiscal sacrifice and, 44, 142 Latin America, 257n8 Leaders’ approaches to war finance, 9, 12–13 in Afghanistan War See Bush, George W.; Obama, Barack attempts to show progress in war and, 211 constraints on leaders in wartime, 17, 43, 83, 120, 214, 216, 217–218 “extraction-coercion” cycle, 20 in Gulf War See Bush, George H W in Iraq War See Bush, George W.; Obama, Barack in Korean War See Truman, Harry S partisanship on how to pay for war, 49, 56 public opinion’s effect on See Fiscal sacrifice; Public opinion and mood in Vietnam War See Johnson, Lyndon B in World Wars I and II, 51 See also Roosevelt, Franklin D.; Wilson, Woodrow Lebanon, 205–206 Lebanon War (2006), 205 Lee, Carrie, 268n44 Levi, Margaret, 256n46 Lewis, Jerry, Liberal theory and financial costs of war, 17 “Liberty Bond” wars, 5, 43, 45, 51, 75, 77, 89 See also World War I; World War II Libya, 175, 177 Limited wars, See also Afghanistan War; Iraq War; Korean War; Vietnam War attempts to show progress in, 211 Clausewitzian theories and, 26 comparison of Quasi-War and War of 1812, 56 constraints on leaders’ financing of, 47–48 definition of, 24 failure to sustain ongoing public support, 27 fiscal sacrifice and, 142 India’s Kargil War (1999), 202–204, 220–221 Israeli approach since 1980s, 206 newness in Korean War and, 112 Smith viewing civilians on sideline of, 25 Lind, Michael, 123 Lippmann, Walter, 22, 270n6 Lipscomb, Glen, 131 Lobbying, 12 Logevall, Fredrik, 122, 135, 137 Los Angeles Times on high excess profits and income taxes, 93 opposed to war taxes for Afghanistan War, 148 on pre-World War I taxes, 82 Lubell, Mark, 260n45 Lugar, Richard, 153 Lusitania sinking, 79 Lute, Douglas, 144–145, 156 Luxury taxes, 60, 92 MacArthur, Douglas, 112, 117, 154 Maddow, Rachel, 221 Madison, James, 50, 56, 57, 64, 66, 67 USS Maine, 69, 70 Manifesto Project, 41 Mansoor, Peter, 162 Marine Corps, 59 Marshall, Thomas, 38 Martin, William McChesney, 131 Mason, Noah, 115 Mass mobilization of wars, 25, 108, 137, 142, 201, 260n50 Mayhew, David, 255n30 McAdoo, William, 87, 90 McCarthyism, 122 McChrystal, Stanley, 146, 154 McClellan, George, 68 McGovern, James, 141–142, 167 McKinley, William, 50, 57, 70, 72 McMaster, H R., 212 McNamara, Robert, 129–130 Medicaid, 40 Medicare, 40, 148, 149, 164, 213 Mellon, Andrew, 34, 35, 94 Mencken, H L., 78 Mexican-American War, 6t, 16f, 26, 44f Michelmore, Molly, 115 Military See also Conscription all-volunteer Army, 216–217 casualties lower due to use of drones and medical advances, 217 early United States’ weak military strength, 59, 62, 64, 73 in Iraq since 2015, 176 Korean War troop strength, 111 in Spanish-American War call-up, 70 transition from labor-intensive to capital-intensive military, Vietnam War troop strength, 122 World War II troop strength, 109 Military advisers as approach to conflicts, 122, 124 Mills, Wilbur, 36, 132–133, 136, 137 Moral hazard, 211 Morgenthau, Henry, 99–100, 105 Moseley, Michael, 169 Moveon.org, 157 Mueller, John, 109–110, 261n59 Munition Manufacturer’s Tax, 84 Murkowski, Lisa, 175 Murtha, John, 141, 180 Nagl, John, 212 Napoleonic wars, 16, 26, 63 Nathan, Otto, 18 National security Afghanistan War and, 146, 147, 159, 181–182 nation-building vs., 9, 27, 210, 212 post-9/11 public support for, 146, 147, 149 US commitment for international security and, 195 National Security Council, 155 National War Tax Resistance Coordinating Committee, 170 NATO countries, defense spending of, 219–220, 220f Nature of war, 11, 21, 24–27, 43–44, 44f, 206 See also Large-scale wars; Limited wars; specific wars less economically advanced countries and, 220–221 Navy, Department of, 59 Nelson, Ben, 180 New Deal Congress repudiating by refusing to approve Roosevelt’s tax bill, 105 debt and inflation increases linked to, 79, 95 fiscal citizenship and entitlement programs, 20 Johnson and, 125 social welfare program of, 37–38, 114, 115 World War II and, 134 Newspaper editorials, 12 See also specific newspapers New York Journal advocating for Spanish-American War, 69–70 New York Times on Afghanistan War, 144, 152 on American imperialism, 69 on Civil War taxes, 25, 45–46 Korean War meeting with Acheson and, 113 on Korean War taxes, 119, 120 on post-World War I election as rebuke to Kitchinism, 91–92 on Spanish-American War taxes, 72–73 on Tax Adjustment Act (1966), 132 on tax increases targeting the wealthy, 83–84 Tyson’s op-ed seeking tax increases to support war on terrorism, 149 on World War I taxes, 85, 86 on World War II taxes, 103 New York World on World War I taxes, 86 Nigeria, 175 9/11 attacks See September 11, 2001 terrorist attacks Nixon, Richard, 216 North Vietnam See Vietnam War Nuclear weapons as deterrent to large-scale wars, 26, 110, 111, 123, 204, 261n59 experimental conditions, nuclear scenarios, 235–238 India and Pakistan, 156, 202–203 Iraq thought to have restarted nuclear weapons program, 161 sensitivity analysis for nuclear scenarios, 239–240 UK considering ending its program to come under American “nuclear umbrella,” 196 Obama, Barack on Afghanistan’s war conclusion, 211 Afghanistan War surge and, 145, 154–156, 157–158, 158t, 214–216 AUMF and, 143 copying Truman’s approach to defuse public concern over war, 156 drone strikes and, 143, 217 emphasizing closure or transience in military commitments, 156 Iraq War and, 175 Nobel Prize speech (2009), 156 on possibility of endless covert wars waged by president, 221, 222 public confidence related to Afghanistan War and, 146–147, 157–158, 158t as senator opposing Iraq War, 173–174 Syria and, 174–175 West Point speech on Afghanistan surge (2009), 147, 156, 210 Obey, David, 141, 153, 166–167, 179–180, 185, 201 O’Brien, Kenneth, 97 Office of Emergency Management, 97 Office of Management and Budget, 40 Office of War Information (OWI), 97, 113 Okun, Arthur, 135–136 Operation Enduring Freedom See Afghanistan War Organization for Economic Cooperation and Development (OECD), 189, 218 Orszag, Peter, 155 Otis, Harrison Gray, 63–64 Pace, Peter, 167, 169 Paine, Thomas, Pakistan, 156, 202 Palestinian Liberation Organization, 205 Partisanship, 214 See also Democrats; Republicans Afghanistan surge financing and war tax, 153–154, 158–159, 183–185, 184f Eismeier on, 294n12 leaders’ approaches to war finance and, 49, 56 Quasi-War (1798) financing and, 57 Spanish-American War financing and, 67–68, 71, 72 Vietnam War and, 174 War of 1812 financing and, 63–64, 67 Patriotism American spending seen as, 218 gender and, 186 Korean War and, 113 post-9/11 attacks, 145–146, 149 World War II and, 20, 86, 88, 89, 103 Patronage and Direct Tax Act, 62 Peacetime taxes effect of high levels of, 151 not returning to prewar levels, 9, 13, 29, 36, 114 post-World War II, 107, 114 pre-World War I, 81–82 between World War I and World War II, 89–93, 94 Pearl Harbor attack (1941), 94, 96 Pechman, Joseph, 131 Pelosi, Nancy, 141–142, 143, 172 Persian Gulf War cost of, 6t, 150 foreign powers financing, 150–151 government expenditures associated with, 16f as limited war, 150 nature of war and nature of state capacity, 44f war tax, punitive consequences for, 151–152, 165, 214 Petraeus, David, 162, 167, 212 Phone tax to fund Vietnam War, 133, 136 Pickering, Timothy, 66–67 Pierson, Paul, 213 Plumer, William, 65 Poland, 219 Political rights, 39, 39t Political science’s view of tax levels and institutions, 28 Pollock v Farmers’ Loan & Trust Co (1895), 33 Populists, 32–34, 71, 72 Printing money, 7, 65 Progressives, 33–34, 36, 37, 81, 86 Project VOLAR (volunteer Army), 216 Project Volunteer Committee, 216 Public goods, willingness to pay for, 182 Public opinion and mood See also Fiscal sacrifice demanding end to war, 43, 51, 74, 138, 168, 185, 187, 216 excise taxes for counterterrorism as ways to make public mindful of wars, 222 expectations of government, 213–214 foreign aid and, 210 ignorance of public and, 22, 26–27, 122–123, 124, 129, 135, 146, 156, 160, 163, 167, 176, 210 influence in World War II, 105–106, 107 instability of public mood, 22 Keynes on, 179 methods to measure, 12 prediction of war’s conclusion and, 211 reliance on technology and shift from direct costs accounting, effect of, 222 tax increases, acceptable reasons for, 213 unclear goals in limited wars and, 9, 27, 112, 118, 150, 210, 215 See also specific wars war tax lowering support for war, 185, 207 Quasi-War (1798), 5, 6t, 7, 8, 50, 58–63 eighteenth-century powers engaged in, 58 nature of war and nature of state capacity, 44f partisanship’s effect on how to pay for, 57 tariffs to finance, 56, 60–63, 74 Quid pro quo view of taxes, 20, 24, 37 Rainey, Joseph, 89 Randolph, John, 66 Rangel, Charles, 141, 179–180 Ratchet effect theory, 29, 29f Rayburn, Sam, 119 Reagan, Ronald, 39, 151, 164 Reaganism, 39–40 Recession, 147, 152 Reid, Harry, 153 Republican-Democrats, 47 Republicans, 30 See also Jeffersonian Republicans Afghanistan War tax proposals and, 153–154, 183–185, 184f anti-war movement of contemporary wars and, 177 beliefs on taxes and government, 184 compared to Federalists, 57 EGTRRA and, 148 Iraq War and, 164, 168 party platform (1888) on veterans’ benefits, 37 party platform (1952) promising to reduce taxes, 36 post-Civil War, 32–33 post-World War I taxes and, 93 post-World War I tax increases proposed by, 90–91 protective tariffs to pay for war and, 31, 49, 50–51, 74 Spanish-American War taxes and, 71, 72, 74 veterans’ benefits and, 37 war taxes and, 47, 74 World War I nonpartisanship and, 87–88 Revenue Act (1913), 34, 82 Revenue Act (1914), 83 Revenue Act (1916), 83–85 Revenue Act (1918), 91–93, 107 Revenue Act (1932), 95 Revenue Act (1935), 95 Revenue Act (1940), 99 Revenue Act (1941), 100 Revenue Act (1942), 100, 102–103 Revenue Act (1943), 100, 104 Revenue Act (1950), 118, 119 Revenue and Expenditure Control Act (1968), 133–134 Revolutionary War, 6t, 8, 30, 37, 55–56, 58, 60, 151, 285n47 Rice, Condoleezza, 163 Ricks, Tom, 171, 212 Ridgway, Matthew, 112, 122 Roberts, Jason, 86 Roche, John, 127 Rockoff, Hugh, 84, 137 Rojas, Fabio, 171 Romer, Christina and David, 94 Roosevelt, Eleanor, 96 Roosevelt, Franklin D See also New Deal; World War II approval rating during war years, 100 biding time to enter into World War II, 94 Budget Message (1941), 99 GI Bill and, 21 on income taxes, 200 public opinion as important to, 78 social welfare program of, 37–38 tax legislation and, 102–105 Roosevelt, Theodore, 86 Roper, Daniel, 89, 90 Roper poll on American desire to avoid entering into World War II, 94 Ruml Plan (1942/3), 104 Rumsfeld, Donald, 166, 169 Russia and Syrian civil war, 175–176 Saldin, Robert, 69 Salvadorans as US war allies in 1980s, 211 San Francisco Star on Spanish-American War taxes, 71 Sapir, Pinhas, 205 Scheve, Kenneth, 201 Scholz, John, 260n45 Schoomaker, Peter Jan, 163 Schumpeter, Joseph, 17, 28 Schwartz, Anna, 95–96 Second Revenue Act, 99 Sectionalism, 31, 33 Security taxes to fight long-term intrastate conflicts, 220 Selective Service Act (1917), 87 Senate Finance Committee, 105, 119 Senate Foreign Relations Committee, 175 Senor, Dan, 154 Sensitivity to war taxes See Cost sensitivity or insensitivity; War taxes Separation of powers, 30 September 11, 2001 terrorist attacks fiscal sacrifice, post-9/11 attitudes toward, 149–156 Iraq and, 161 patriotic response to, 145–146, 149 proposed tax to help rebuild New York City, 149 use-of-force approach as response to, 143 war tax proposed in response to, Servicemen’s Readjustment Act (1944), 21 Sheehan, Cindy, 170 Sinha, Shri Yashwant, 202, 203 Sin taxes, 60 Sixteenth Amendment, 31, 33, 34 Small-scale wars See Limited wars Smith, Adam, 10, 14, 17, 23, 25, 82 Smoot, Reed, 82 Social rights, 39, 39t Social Security Act (1952), 114 Social Security Administration, 114 Social Security Amendments (1950), 114 Social Security program, 40, 106, 114, 143, 148–149, 213 payroll tax to finance, 105, 106 Tax Adjustment Act (1966) and, 132, 134 Social welfare programs, 37–40, 107, 108, 114–116, 118, 164, 212 See also Guns-butter trade-off in Israel, 204–205 in United Kingdom, 196 Somalia, 175 South Korea, US continuing defense presence in, 111, 171 Soviet Union and Cold War, 111–112, 115 See also Korean War Afghanistan invasion by Soviets, 152 America’s liberalism in reaction to, 126 Spain, 219 Spanish-American War, 2, 5, 6t, 50, 67–73 backdrop to, 68–70 borrowing considered as method to finance, 20 fiscal sacrifice in, 70, 72 government expenditures associated with, 16f, 56 nature of war and nature of state capacity, 44f partisanship’s effect on, 67–68, 71, 72 tax reduction after conclusion of, 73 war tax to finance, 56, 71–73 Sparrow, James, 20 Special operations forces, 222 Sprague, O M W., 87 Stalin, Joseph, 111 Stamp Tax (1765), 8, 61 Stasavage, David, 201 State Department, 113–114, 213, 293n183 State-society relations, 9, 11 in advanced industrialized democracies, 201, 218 Afghanistan War and, 44f, 147–148 costs of war and, 21, 24, 108 definition of, 27 extractive capacity in relation to state capacity, 28–29 fiscal sacrifice, public support for and, 27–29 Iraq War and, 44f, 163–165 nature of war and, 44f, 44–45, 142 state-building and, 28–29 taxation as fundamental element of, 28 Stiglitz, Joseph, 15 Survey on Afghanistan War See Afghanistan War, survey on war tax Syrian civil war, 52, 175–178 Taliban, 143–144, 147, 155, 215 See also Afghanistan War Talleyrand-Perigord, Charles Maurice de, 59 Tannenwald, Nina, 110 Tariffs between Civil War and World War II, 72–73, 74 Dingley Tariff, 71 early American republic and, 31, 49, 50–51 Quasi-War (1798) finance and, 56, 60–63, 74 Underwood Tariff Act (1913), 73 Wilson-Gormon Tariff Act (1894), 33, 71 World War I and lost tariff revenues, 81–82 Tax Adjustment Act (1966), 128, 132 Taxation: The People’s Business (Mellon), 34–35 Tax continuity model, 182–184 Tax legislation and system See also Revenue Acts; Tariffs; War taxes; specific presidents deficit reduction and, 190 design of, 12–13, 78 excise taxes See Excise taxes income tax See Income tax palatable causes for tax increases, 213 political risk discouraging politicians from seeking tax increases, 147 progressive taxation, 198–201, 251, 297n52 public ignorance of, 22 public view of tax rates as too high, 22–23, 23f security taxes to fight long-term intrastate conflicts, 220 tax revenue as share of GDP, 188–189, 189f unsustainable consequences of lower tax rates and tax loopholes, 42 wealthy as targets of, 83–85, 94, 104, 199, 275n113 Taylor, Leonard, 129 Thatcher, Margaret, 39 Thirty Years War, 162 The Three Trillion Dollar War (Stiglitz & Bilmes), 15 Tilly, Charles, 4, 18, 28, 261n70 Time on Iraq build-up since 2015, 176 Tories, 30, 62 Total wars See Large-scale wars Transparency, 85, 130, 141 See also Democratic accountability Treaty of Paris (1783), 58 Truman, Harry S See also Korean War Obama copying approach to defuse public concern over war, 156 “pay as you go” war finance approach of, 119 propaganda and public relations, 113, 117–118 war taxes introduced by, 5, 120, 137, 214 Trump, Donald, 40, 195 Turner, Fredrick Jackson, 69 Tyson, Laura, 149 Underwood Tariff Act (1913), 73 United Kingdom comparison with US experience, 11, 13, 188–197 debt control from participation in Iraq and Afghanistan Wars, 195–196 Defense Review (2010), 195 Defense Review (2015), 196 drones, use of, 190 fiscal sacrifice in World War II, 179 income tax to support war efforts, 16–17 international security commitments and, 195 modernization in, 38–39 Strategic Defence and Security Review (2010), 196 tax revenue as share of GDP, 189, 189f text of survey questions, 245–247 Trident program, 196 in war with United States See Revolutionary War; War of 1812 United Nations Iraq War and, 162 Security Council’s Resolution 84 (1950), 110–111 Vietnam War and, 121 US Labor against the War, 157 US News and World Report on public expectations of social welfare programs, 38 US Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act (2007), 172 Vermont Gazette on opposition to taxes to support Quasi-War (1798), 62 Veterans’ benefits, 37, 134 Victory, sacrifices to achieve, 10, 21, 25, 43 Viet Minh, 121–122 Vietnam Veterans Memorial, 121 Vietnam War, 51, 121–138 anti-war movement, 136–137 background of, 121–122 borrowing as method to finance, 51 compared to Afghanistan War, 4, 48 compared to Iraq War, 4, 48, 142, 167 concealing costs of, in defense budgeting, 128–130 consequences of deferred costs from, 134–138 cost of, 6t, 128–131 counterinsurgency strategy of, 212 effect of calling tax surtax as opposed to war tax, 137–138 failure to sustain ongoing public support, 27, 127t, 127–128 fiscal sacrifice, attitudes about, 123, 127t, 127–134 gradual troop build-up in, 122–123, 124 Gulf of Tonkin Resolution (1964), 135 guns-butter trade-off and, 125–127, 282n117 historical polling of American support for, 229–231t ignorance of public and confusion over, 122–123, 124, 129, 135 as limited war, 123–125 as model for future leaders to avoid tax increases, 150 nature of war and nature of state capacity, 44f, 108 Nixon abolishing conscription in favor of all-volunteer force and, 216 surtax, 5, 51, 108, 131, 132–134, 137, 138 as transition between large-scale war/low state-capacity world, 48, 51, 108 US casualties of African Americans in, 217 Volcker, Paul, 128 von Hippel, Karin, 293n183 Voter approval, 255n38 Voting Rights Act (1965), 126 Wall Street Journal on World War I costs, 81 Waltz, Kenneth, 195 War and peace, blurring of line between, 221–222 War bonds, 181, 206 See also “Liberty Bond” wars War of 1812, 6t, 8, 50, 63–67 causes of, 63 direct and indirect taxes levied to support, 66 financing of, 64–67 fiscal sacrifice in, 50 government expenditures associated with, 16f, 56, 66, 73 nature of war and nature of state capacity, 44f partisanship’s effect on, 63–64, 67 unpopularity of tax to finance, 56, 64–65, 74 War Powers Resolution (1973), 177 War Resister League, 136 War Revenue Act (1898), 72 War Revenue Reduction Act (1901), 73 War taxes See also Fiscal sacrifice; Tax legislation and system; specific wars accountability for war linked to, 4, 222 See also Democratic accountability contemporary shift to anti-war tax tradition, 5–7, 47, 142–143, 187–188 France, cross-national comparison See Cross-national survey historical polling of American support for, 225–233 India and Kargil War (1999), 202–204 Israel and defense spending, 205–206 Keynes on, 179 leaders trying to avoid, 8–9, 48, 110, 130–131, 138, 142, 150, 180, 188, 206, 207, 214 legitimacy of war linked to, 21, 97–98 nature of war and See Costs of American wars new types of taxes to replace, 222 peacetime taxes not returning to prewar levels, 9, 13, 29, 36 present-day wars, reluctance to finance by, 51–52 See also Afghanistan War; Afghanistan War, survey on war tax; Iraq War as progressive taxes, 199–200, 200f, 251 state-society relationship and See State-society relations tax increase linked to war, 5, See also specific wars United Kingdom, cross-national comparison See Cross-national survey Washington, George, 60–61 Washington Post on pre-World War I taxes, 82 on Spanish-American War taxes, 70 on World War I taxes, 18, 88 Waxman, Matthew, 222 Ways and Means Committee, 33, 36, 85, 88, 93, 100 Westmoreland, William, 211 Whigs, 30, 32 Will, George, 154 Wilson, Woodrow, 1–2 See also World War I bolstering support for World War I and reelection, 85–87, 158 neutrality in World War I and, 81 pre-war taxes and, 82, 214 Progressive movement and, 37 public opinion as important to, 78 tax reform and, 73 wealthy as targets of tax increases and, 83–85, 166 World War I debt and, 19 World War I taxes and, 34–35, 89 Wilson-Gormon Tariff Act (1894), 33, 71 Wolfowitz, Paul, 166 Woodward, Bob, 154–156, 169 Works Progress Administration, 114 World (newspaper) advocating for Spanish-American War, 70 World War I, 79–93 alliance with other powers comparable to United States in, 210 background of, 79 compared to Korean War, 117 cost of, 6t, 81, 270n3 cost sensitivity in prewar populace (1914–1917), 1–2, 80, 80t, 81–86 end of war, end of sense of fiscal sacrifice (1918–1919), 80, 80t, 89–93 fiscal sacrifice and insensitivity to wartime “war” taxes (1917–1918), 7, 18, 34, 51, 75, 77, 78, 80t, 86–89, 106–107 government expenditures associated with, 16f, 79 nature of war and nature of state capacity, 44f post-World War I taxes, 93, 203 pre-World War I taxes, 81–82, 214 ratchet effect theory and tax increases, 29, 29f repaying war debt after, 19 social welfare aspect absent from, 79 World War II, 93–106 alliance with other powers comparable to United States in, 210 compared to Afghanistan War, 210 compared to Civil War, 96, 270n3 compared to Iraq War, 142, 209–210 compared to Korean War, 117 compared to World War I, 96 cost of, 6t, 8, 270n3 fiscal citizenship and, 20 fiscal sacrifice and tax increases seen as justified, 35, 77, 78, 93–102, 94, 101–102, 106–107, 209 government expenditures associated with, 16f, 95 historical polling of American support for, 226–228t as “last” war involving tax structure, 107 Lend-Lease program, 94 limits to fiscal sacrifice in and rebuff of Roosevelt’s tax bills, 102–106, 107 macroeconomic trends associated with, 95–96 nature of war and nature of state capacity, 44f Nazi war finance, 18 ratchet effect theory and tax increases, 29, 29f social welfare aspect present from New Deal programs, 79 US economy prior to entering war, 95–96 US entry into, 94 Victory Tax, 100, 104 XYZ affair, 59, 63 Yom Kippur War (1973), 205 Yougov (polling firm), 245, 249, 295n26, 297n50 Zelizer, Julian, 115, 134 Zero-sum game of wars in Iraq and Afghanistan, 144 Zimmerman Telegram (1917), 79 .. .TAXING WARS TAXING WARS The American Way of War Finance and the Decline of Democracy SARAH E KREPS Oxford University Press is a department of the University of Oxford It furthers the University’s... it comes to the conduct of war War Finance and Democratic Accountability The direct connection between the populace and the burdens of war underlies many of the theoretical checks and balances... prologue TABLE 1.1 The Cost of American Wars* War Years Total War Cost Cost % GDP in (Constant Peak Year FY2001$) of War American Revolution FrancoAmerican War War of 1812 MexicanAmerican War 1775– 1783