Published by EH.NET (June 1, 2000)

Julian E. Zelizer, Taxing America: Wilbur D. Mills, Congress, and the State,

1945-1975. Cambridge and New York: Cambridge University Press, 1998. xv +

384 pp. $49.95 (cloth), ISBN: 0-521-62166-6.

Reviewed for EH.NET by Dennis J. Ventry, Jr.

The Not-So-Hidden Welfare State

Julian Zelizer begins his award-winning book, Taxing America, with a

question: “How did the American state achieve what it did between 1945 and

1975, despite the nation’s anti-statist culture and despite its fragmented

political institutions?” He posits four answers. First, Congress guarded

jealously the power to tax. By maintaining its constitutional jurisdiction over

taxation, and through various institutional and procedural changes,

particularly the decentralized committee system, Congress maintained

“tremendous influence” over how and by how much the federal government raised

revenues and distributed tax expenditures (p. 7). Second, policy communities

helped bridge gaps between “fragmented political institutions,” and facilitated

interaction among otherwise disconnected members of the policymaking process

(pp. 8-11). Third, taxation was central “to postwar liberalism and its domestic

agenda” (p. 11). It provided legislators an indirect expenditure route that

bypassed the nation’s anti-statist culture, and allowed them to enact and

enlarge a social safety net that prominently included the Social Security and

Medicare programs. And finally, fiscal conservatives “entered into a fragile

alliance with the state,” accepting, for instance, stimulatory tax cuts,

moderate deficit financing, and contributory social insurance (pp. 16-17).

Zelizer, an Associate Professor of History and Public Policy at the State

University of New York at Albany, uses the career of Wilbur Mills to

demonstrate how the American state achieved so much between the end of World

War II and the mid-1970s. When Mills arrived in Washington in 1938 as a

first-term Congressman from central Arkansas, he encountered a political system

“dominated by political parties and interest groups” (p. 27). When Mills left

Washington thirty years later, the policymaking process had changed

dramatically, in large part because of the transformations that he and his

generation wrought, including significantly increasing the power of committees

and committee chairman, and insulating committees and Congressional politicking

from public and even executive scrutiny. Theirs was a generation that

emphasized technocratic, expert policymaking, not democratic processes. Attuned

to the value of specialization, Wilbur Mills, Chairman of the House Ways and

Means Committee from 1958 to 1974, carved out a power-niche for himself as

Congress’ resident tax expert. He poured over the Internal Revenue Code late at

night — not exactly light reading. More importantly, he forged alliances with

what Zelizer terms the “tax policy community.” The members of this community

included politicians and key committee members, representatives and experts

from business and financial associations (such as the Chamber of Commerce and

the Committee for Economic Development), staff members from executive and

congressional agencies (including the Treasury Department, the Council of

Economic Advisors, and the Joint Committee on Internal Revenue Taxation), civil

servants and administrative officials (from the Social Security Administration,

for instance), policy experts (primarily lawyers and economists) from

universities and thinktanks, and certain members of the media. While

anti-statists guarded the expenditure side of the national budget, Mills and

the tax policymaking community used the revenue side of the budget to undertake

a remarkable expansion of the American state. By enlarging self-supporting

programs like Social Security, moreover, fiscal conservatives such as Mills

consolidated their state-building gains, and became partners with the federal

government in providing social welfare services for millions of Americans.

Zelizer illustrates how taxation dominated the domestic political agenda in

postwar America by discussing several high profile, yet largely neglected,

fiscal policy discussions. He describes the Joint Economic Committee’s 1955 and

1957 hearings on “Federal Tax Policy for Economic Growth and Stability,” and

“Federal Expenditure Policy for Economic Growth and Stability,” respectively.

Moreover, he recreates the 1959 “Tax Revision Compendium,” sponsored by Wilbur

Mills’ Ways and Means Committee. These hearings and the multiple volumes that

recorded them, Zelizer shows, set the postwar tax policy agenda of tax cuts and

base-broadening that animated the Tax Reform Act of 1969, and ultimately, the

much-heralded 1986 Tax Reform Act. Taxing America also adds to our

understanding of both Social Security and Medicare. Zelizer provides a rich

discussion of the financing arrangements of Social Security, and how they

enhanced the program’s appeal and secured its consolidation. Moreover, the

chapter on Medicare — by describing the difficulties that policymakers faced

in financing health care benefits through payroll-tax expansions as well as the

natural inclination of politicians to enlarge existing programs — exposes the

limited state-building capacity of fiscal conservatives.

In the end, Taxing America (winner of the Organization of American

Historians’ Ellis W. Hawley Prize in 1999 for the best book on U.S. political

economy, politics, and institutions) describes, from the tax side, the

“triumph” of growth liberalism in postwar America. It illustrates how taxation

made comfortable bedfellows out of fiscal conservatives and growth liberals.

And it reminds readers that much of what Mills and his generation accomplished

in economic and social policy was facilitated by what economist Gene Steuerle

has called, an “era of easy financing.” That is, for twenty-five years after

World War II, growth characterized the American economy. An expanding economic

pie increased income tax revenues, created surpluses for the nation’s social

insurance system, and allowed legislators to enjoy a form of state-building

that was largely devoid of tough choices such as tax increases and spending


We should keep in mind, however, that the era of easy financing and the

“triumph” of growth liberalism also involved the defeat of alternative liberal

agendas. Unfortunately, Taxing America ignores the vanquished. Liberal

politicians such as Paul Douglas and Albert Gore make quick appearances in the

book, but primarily as gadflies (pp. 141, 306). Liberal economists such as John

Kenneth Galbraith and Leon Keyserling are relegated hardly a mention; Zelizer

dismisses them as “social Keynesians” in a short paragraph under a section

entitled, “The Alternatives Rejected.” Indeed, there is no discussion of

alternative visions for postwar America beyond the fiscally conservative,

supply-side, rising-tide vision articulated by Mills and his tax policymaking

community. At several points in the book, Zelizer alludes to alternatives to

growthmanship, but he never explores them. For instance, he quotes liberal

economist Richard Musgrave criticizing the Kennedy administration’s tax package

at a Treasury Department consultants’ meeting. “I am bothered by the

Administration’s failure to emphasize the importance of the equity objectives

in the whole reform issue,” Musgrave stated. “To argue for base broadening as

needed merely to permit rate cuts (required on incentive grounds) without

exceeding the ‘permissible’ deficit, and not urge it on equity grounds, is a

pretty weak position from which to defend the reform case. One cannot but note

a change in flavor, in this respect,” Musgrave observed, “between the tax

messages of ’62 and ’63” (p. 192). Regrettably, Zelizer foregoes investigating

the implications of Musgrave’s complaint. The tradeoff between growth and

equity was real, as Musgrave suggested. Potentially, it involved redistributing

the economic pie, not just enlarging it. It involved, moreover, evaluating

relative societal benefits and burdens, and considering the moral, not just the

economic, implications of taxation. Taxing America disregards this

alternative vision of state-building altogether.

In Zelizer’s defense, he set out to tell the story of “how American government

has worked,” not how it might have worked (p. 372). In this endeavor, he has

succeeded admirably. Taxing America is a must read for economic,

political, and policy historians, as well as political scientists and

sociologists interested in state-building. It reminds scholars of postwar

America that the nation’s tax system played a crucial role in the formation of

the modern American state. And it points the way for further research into the

myriad ways tax policy also acts as social policy.

Mr. Ventry is a Ph.D. Candidate in History at the University of California,

Santa Barbara. He is also a Visiting Fellow at Harvard University (1999-2000),

and the Robert W. Hartley Memorial Fellow (2000-2001) at the Brookings

Institution in Washington, D.C. Recent publications include “The Collision of

Tax and Welfare Politics: The Political History of the Earned Income Tax

Credit, 1969-1999,” National Tax Journal (Sept. 2000), and Tax Justice

Reconsidered: The Moral and Ethical Bases of Taxation (Urban Institute

Press, 2000).