A Trade-In for the Corporate-Income Tax: Echoes

Taxes wear out. Like a new car, they start out fresh and shiny (if lacking that new-car smell). After a few years, things start to go wrong. Eventually, as failures become more frequent and repairs less durable, the time arrives for a trade-in.

We have reached that point with the corporate-income tax. With more than 100 years under its belt, it had a pretty good run. Over the years, it raised a lot of money, regulated some unsavory business practices and helped make the tax system more progressive.

Andrew Mellon would back it. That's the recent analysis of the "Buffett Rule," a plan to reform the tax law that would require top earners, including those who make much of their money from investments, to pay the same percentage of their earnings as those in the middle class do.

The rule was suggested by Warren E. Buffett, the chief executive officer of Berkshire Hathaway Inc., this summer in an op-ed in the New York Times. "My friends and I have been coddled long enough by a billionaire-friendly Congress," the so-called Oracle of Omaha wrote. "It's time for our government to get serious about shared sacrifice." President Barack Obama has since endorsed the idea.

In 1974, a British researcher suggested that the pertussis vaccine might cause brain damage. A flood of lawsuits followed, and the cost of the shot began to climb. So did anxiety among drugmakers. A suit against one manufacturer resulted in a judgment of $1.1 million, or more than half the total market for the vaccine.

Immunization is scary. Kids are afraid of needles, and parents are worried about autism. The New York Times described a "climate of fear about vaccines in general" that has recently arisen, one in which false alarms can quickly lead to decreased rates of use. Some politicians fear the effect mandatory vaccines have on individual freedom and social morality, as Amity Shlaes discussed in her column this week.

Republicans can't stop talking about the vaccine for human papilloma virus. Governor Rick Perry of Texas, a presidential candidate, is under fire for having issued an executive order in 2007 that allowed his health commissioner to mandate inoculation against the virus for girls entering sixth grade.

Since HPV can lead to cancer, Perry thought he was saving lives. Some critics charged he was infringing on parents' rights with his rule. One of his opponents, Representative Michele Bachmann of Minnesota, even quoted a mother who alleged her child suffered brain damage from the vaccine, suggesting the dispute was about safety. That claim has served for debunking fodder for a week now.

In 1977, Congress first gave the Federal Reserve a dual mandate to promote both “maximum employment” and “stable prices.” At the Republican presidential debate on Sept. 12, the major candidates argued that the Fed should instead focus squarely on the goal of long-run price stability.

Responding to a question about the Fed, Rick Santorum said: “make it a single charter instead of a dual charter” institution, and no candidate disagreed. Most piled on. “Its focus needs to be narrowed,” said Herman Cain. “We need to have a Fed that is working towards sound monetary policy,” said Rick Perry. “The Federal Reserve has a responsibility to preserve the value of our currency,” said Mitt Romney.

U.S. President Barack Obama might like to call it a "jobs bill," but opponents of his $447 billion recovery measure prefer a different label: stimulus.

And why wouldn't they? Over the past two years, the notion of using government spending to jump-start a recovery has been thoroughly discredited with voters, if not with most economists.

On his blog at the New York Times, Paul Krugman recently evoked the "Broken Window" parable to illustrate the merits of government spending in bad times.

Krugman contends that such spending generates economic activity that otherwise wouldn't occur, and thus creates growth. President Barack Obama essentially endorsed the same idea in the jobs plan he announced last week. CNBC's Larry Kudlow, among others, makes the contrary case, that such spending reallocates economic activity to less efficient areas, thereby slowing growth.

I was in a hotel room in Tokyo on Sept. 11, 2001, preparing for negotiations at the Japanese finance ministry. I had just been sworn in as U.S. Treasury Under Secretary for International Affairs. We immediately cancelled our meetings and were soon on a C-17 military jet flying back to the U.S. To get back faster we refueled in midair over Alaska that night. The pilot invited me to watch the procedure from the cockpit; it was the most impressive combination of advanced technology, hand-eye coordination, precision teamwork and raw nerve that I had ever observed.

Our pilot approached the tanker jet from underneath, using a specially designed joystick with a monitoring device consisting of rows of lights that turned red or green depending on whether our plane was coming up at the right position relative to the tanker. These two huge jets were zooming through the dark at something like 500 miles per hour, so close that I could see the faces of the guys in the tanker as they lowered the fuel hose. After a while the tank registered full, and we headed home across Canada. As we flew into U.S. airspace there were no commercial airliners to be seen. The plane’s radar screen was nearly blank.

Since the Sept. 11 attacks, the U.S. has been waging a different kind of war. It’s been both smaller and longer than previous wars, taking less money to fight and more time to win. It’s also been the nation’s first war to be fought entirely on credit.

For almost a decade, military operations -- first in Afghanistan and later in Iraq -- have been the most visible front in the War on Terrorism. Taken together, they are not yet the nation’s longest war; Vietnam still holds that title, having claimed American lives from 1961 to 1975.

No doubt, President Barack Obama will call for stimulus when he talks about job creation in his speech Thursday. Since many of us by now recoil at the word, perhaps it helps to ask, once again: Which Obama stimulus would be the least bad?

The answer, as it happens, is neatly framed in a recent photo of young women posing as Rosie the Riveter, the symbolic female factory worker from World War II. They were snapped on the occasion of Obama's Labor Day visit to the Detroit area (unemployment 15 percent). Defense spending is the key: More hiring and spending by the Army, Navy, Air Force and affiliated departments, such as the Defense Advanced Research Projects Agency, the high-end military technology developer known as DARPA.