Sen. Levin Sees Need For More Defense Funds From Tax Revenues

More money is needed for defense programs than the present federal top line budget will provide, and that need should dictate raising more revenues in taxes, the new chairman of the Senate Armed Services Committee said.

But it may be years before the new revenue streams begin to flow.

Sen. Carl Levin (D-Mich.), the incoming chairman, downplayed chances that the new Democratic leadership in Congress will pass separate legislation to increase taxes immediately.

Rather, he told military-topic journalists at a Defense Writers Group breakfast, Democratic leaders may raise the revenues by waiting until 2010 or 2011, when tax cuts enacted in 2001 and 2003 are set to expire automatically.

A return to the earlier tax rate levels in effect during the long economic boom years of the 1990s would mean greatly increased federal revenues and, temporarily, an end to federal budget deficits and borrowing.

Levin said it is much more likely the new revenues would be found by permitting the 2001 and 2003 tax cuts to expire, as they will automatically, in 2010 or 2011, rather than the Democratic-led Congress passing legislation immediately to raise tax rates now.

The committee chairman indicated that, were it left to him, the tax cuts would disappear even sooner. But clearly, he is insistent on letting the tax cuts end, rather than seeing them extended or made permanent as President Bush proposes.

It is wrong that tax cuts persist even as defense programs may lack for revenues in a time of war, Levin said.

Asked whether Congress might pass tax increase legislation to support the Army, Levin spoke of the need to support Army and Marine programs, without specifying which programs (missiles, vehicles or other) he was citing.

“I think we have to do what we need to do in terms of the Army, and the Marines,” he said. “We have to do more than that, though. We have to take a look not just at size but at the readiness aspects, the problems which exist with our readiness, without — the whole reset issue.

“We’ve got to show willingness to have an Army which is strong enough to do what it has to do, and which is modern enough to do what it has to do. And do whatever is necessary in terms of our budget to accomplish that, and to make that clear to the American public. But a lot’s going to depend on Iraq, in terms of the cost of Iraq.” He noted that the war in Iraq is consuming billions of dollars each month.

Specifically focusing on the possibility of a tax increase to raise revenues supporting the military, Levin said if Congress permits the 2001 and 2003 tax cuts to expire as slated, without extensions, that will draw criticism.

“I think if we hopefully oppose making [Bush’s] tax cuts permanent, that it’ll be characterized, to be sure, as a tax increase,” Levin said.

He pledged to press for expiration of the tax cuts on schedule at the end of the decade, as a means of financing defense.

“I think our first step has got to be to reverse this president’s tax policies as far as tax cuts,” Levin said. “If we can do that, we’ll be doing – making a major contribution.”

Another means of raising new funds for military programs such as weapons procurement would be to draw down troops in Iraq, creating savings of billions of dollars per month.

Levin said such savings, at least initially, likely would remain in military agencies, rather than being diverted to domestic programs.

“I would think that there are reductions … because of savings from reductions in Iraq that they probably in the short term would stay in the military budget, would be my guess,” he said.