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The fiscally-disciplined Blue Dogs appear to have gotten their way in insisting that the veterans benefits portion of the war funding bill be paid for…  Well, at least in the House, and at least for now…

From an AP story by Andrew Taylor, posted last night:

Conservative “Blue Dog” Democrats blocked a vote last week over Democratic leaders’ attempts to add an additional $51.8 billion over the next decade for veterans education to the $183.8 billion war funding tab. They insisted on finding a way to pay for the new benefit without simply adding to the deficit.

“What we’re talking about is a one-half percent income tax surcharge on incomes above $1 million,” said Rep. Mike Ross, D-Ark., a leader of the Blue Dog group. “So someone who earns $2 million a year would pay $5,000. … They’re not going to miss it.”

The $1 million adjusted gross income level would apply to couples. Individuals would pay the surcharge on adjusted income exceeding $500,000.

The idea earned support from House leaders at a late afternoon meeting of top Democrats, including Speaker Nancy Pelosi of California.

The new GI Bill would essentially guarantee a full-ride scholarship to any in-state public university, along with a monthly housing stipend, for individuals who serve the military for at least three years.

It’s not at all clear that the tax surcharge could survive the Senate and it would likely prompt a veto from President Bush if it were to be presented to him. Still, the development allows House Democrats to keep promises to adhere to pay-as-you-go budget rules that were a top campaign plank in 2006.

The war funding bill still faces a troubled path to enactment and Democrats appear likely to miss their goal of passing the bill by Memorial Day.

I actually like the idea of the millionaire surtax in terms of the “shared sacrifice” it conveys, as well as the relative simplicity and efficiency of it.  (I know it does raise the marginal tax rate on those millionaires, but as Mike Ross says, not by enough for them to notice it or react to it much.)  And on principle, because these new vets benefits are new, permanent, entitlement spending, the Blue Dogs felt that at least that part of the costs of war should be paid for rather than deficit-financed.

But this is rather like picking up the “tip” at the restaurant while avoiding paying the actual tab.  The much larger issue is the fact that we current taxpayers have not paid for the “temporary” costs of the war but instead will run up a least a trillion more dollars in debt.  Now, I know a lot of us think the war should have never happened, and so the last thing we might want to do is to pay for it with higher taxes.  But the deficit-finance route doesn’t rip up the tab–it only passes it along to our kids and grandkids as it swells along through time, growing with compounding interest.  For those of us who are horrified by the talk of the war or at least the war’s “legacy” lasting decades and perhaps 100 years, unfortunately the fiscal legacy of the war is likely to go on much longer. 

So we at the Concord Coalition say hooray for the Blue Dogs for keeping up the fight for our kids’ economic future.