Despite serving only one term from 1989-1993, US President George H. W. Bush (just released from the hospital yesterday after a bout of fever and other complications) has cast a long shadow over subsequent events. His decision to leave Saddam Hussein in place after the First Iraq War led to his son’s immensely controversial Second Iraq War. And the negative reaction to his decision to compromise with Democrats in raising taxes in 1990 despite his pledge “Read my lips, no new taxes” has set the terms of the tax policy debate ever since. Tax reformer Grover Norquist codified the principle of “no new taxes” into the Taxpayer Protection Pledge, which goes as follows:

I, ____ pledge to the taxpayers of the state of ____, and to the American people that I will:

ONE, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and

TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

Republican Speaker of the House John Boehner made a nod toward this pledge two weeks ago, pushing for the temporary resolution of the fiscal cliff, when he reminded his rank and file that, technically, taxes had already gone up, due to the expiration of the younger Bush’s tax cuts at year end. The implication was that members of Congress would really be voting for a tax cut, not a tax increase, and so would not be breaking their pledge. There is no doubt that this matter of interpretation will feature prominently in the GOP primaries in 2014.

The ongoing crisis in long-run US taxing and spending policy is born from the collision of an almost unstoppable force on the spending side with Grover Norquist’s almost immovable object on the taxing side. Former Treasury Secretary Larry Summers ably describes the almost unstoppable force on the spending side in his Washington Post editorial “The Reality of Trying to Shrink Government.” The bottom line is that the explosion of government spending is primarily the result of (1) an aging population, (2) having to pay interest on ballooning government debt, and (3) the increasing cost of medicine that keeps discovering ways to do more with the expensive skilled labor of doctors and other medical professionals. To put it bluntly, the only way to keep government spending constant in the future, let alone reduce it, would be to dramatically reduce benefit levels for Social Security, Medicare and Medicaid, or to gut all the other functions of government, from national defense to the judicial system to scientific research.
It is easy to be misunderstood when mentioning Hitler, but here I want to invoke a comparison solely in his role as an inept commander-in-chief of the German armed forces and in no other capacity. In his book, The Storm of War: A New History of the Second World War, Andrew Roberts argues that Hitler’s no-retreat, “stand-or-die” orders were strategically disastrous for the German forces. German generals had a brilliant record at turning tactical retreats into great German victories. But Hitler’s stand-or-die orders took away the advantage of maneuver and left German troops to be mowed down by the Russians under Stalin. My point is that the “stand-or-die” approach is likely to do no better against the spending juggernaut than it did against Stalin.

In our long-run fiscal situation, the alternatives (of which we may need more than one) are to convince the American people to swallow straight benefit cuts, to directly raise tax rates, to grow the economy to get more revenue through:

1. Increased immigration, done in a way that focuses on economic growth, as I discussed in a previous Quartz piece entitled “Obama could really help the US economy by pushing for more legal immigration”

2. A more efficient tax system that encourages capital formation, as discussed in my “Twitter Round Table on Consumption Taxation”

3. A big push for increased scientific research to accelerate technological progress

But then what? I propose that many of the jobs the government has set for itself actually be done outside the government, by the non-profit sector.

In my recent blog post “No Tax Increase Without Recompense” (there’s a cliff notes version here), I propose a “public contribution system” that goes far beyond the current tax deduction for charitable contributions. In this program:

A public contribution is a donation to a nonprofit organization meeting high quality standards that engages in activities that (a) could be legitimate, high-priority activities of Federal or State governments and (b) can to an important extent substitute for spending these governments would otherwise be likely to do.

My proposal is to raise marginal tax rates above about $75,000 per person—or $150,000 per couple—by 10% (a dime on every extra dollar), but offer a 100% tax credit for public contributions up to the entire amount of the tax surcharge.

In addition to helping the government budget by taking over tasks the government is now doing and by reducing revenue lost to the current charitable deduction, I believe the non-profit sector (with the usual level of regulation) can do many things better than the government, and this program would be much less painful for people than paying the same amount in taxes. It is easy to find fulfillment in philanthropy. There is satisfaction in knowing one has made a difference in the world, in a way of one’s own choosing. And giving can serve as a good opportunity for teaching children to care. No doubt, some would view these contributions to charitable causes as almost as onerous as the taxes to which they would be an alternative. But I don’t think that would be the typical reaction.

Many people talk as if taxes are hateful only because the government is taking our money. But taxes are also hateful because the government is arrogating to itself the choice of what should be done with the money it takes from us. The government is jealous of its power. But let us insist that any resolution of our long-run fiscal crisis reduces, rather than adds to, government power. We do need to take care of those who are poor, sick and elderly. A program of public contributions shrinks government, while getting the job done. And it would be a fitting honor for George H. W. Bush, who said movingly in his inaugural address:

I have spoken of a thousand points of light, of all the community organizations that are spread like stars throughout the Nation, doing good. . . . The old ideas are new again because they are not old, they are timeless: duty, sacrifice, commitment, and a patriotism that finds its expression in taking part and pitching in.

Follow Miles on Twitter at@mileskimball. His blog is supplysideliberal.com. We welcome your comments at ideas@qz.com.

The amount of time corporate CEOs spent pushing for an income-tax-hiking resolution to America’s fiscal cliff was well worth it for their companies—particularly because it re-opened tax loopholes worth $10.6 billion for multinationals.

Alongside the big picture fiscal cliff resolution, a package of miscellaneous tax breaks was also renewed. It’s referred to in Washington as “extenders.” (See the whole breakdown.) Many of these breaks prompted incredulity—a tax break just for NASCAR?—or were identified as typical Washington pork barrel spending. But while the headline grabbers were multi-million-dollar giveaways for Hollywood filmmakers or American Samoa, the most notable breaks really were for American corporations doing business abroad.

The extenders package emerged from the Senate Finance Committee with bipartisan support in the summer of 2011, earning plaudits from the conservative Heritage Foundation for eliminating 21 tax breaks. It was designed as a vehicle for bipartisan compromise, containing everything the two parties in the Senate felt was an easy “yes,” including business-friendly stimulus, the yearly fix of the Alternative Minimum Tax and a healthy dosage of corporate largesse. It included economically important provisions like the Research & Development tax credit, which was the most expensive part of the bill at $14 billion; individual incentives like tax breaks for student loans; and politically untouchable provisions like the adoption tax credit and hiring incentives for veterans.

While Republicans in the House objected to tax credits supporting green energy, the general sense among legislators was that agreement was close between the tax writers in both chambers. As the fiscal cliff moved into an endgame after the election, most analysts expected the extenders would be included in any deal, thanks to bipartisan favor in the Senate and House Republicans clamoring to pass them, not to mention the support of a dozen influential lobbies, including green energy investors favored by the Obama administration and influential Wall Street advocates.

“It’ll go in the big fiscal compromise,” Congressional Quarterly tax writer Sam Goldfarb warned presciently in early December, “and you won’t hear a lot about it unless someone’s like, ‘they passed a NASCAR tax break in this big deficit reduction deal?’”

Despite some last minute game-playing, the extenders were included in the compromise. The endless fight over raising taxes on the wealthy allowed the various breaks to pass without intense scrutiny. While any of the most questionable regionally-targeted breaks—like the 9/11-inspired financial breaks for building in New York City’s financial district—might have been targeted for elimination, legislators feared pulling a thread at the last minute could unravel the whole sweater.

While there wasn’t much to the idea that policy “uncertainty” actually held back economic growth, if you actually asked companies what worried them, it was ensuring the renewal of tax incentives for research and buying new equipment that were enacted as part of the 2009 economic stimulus and were now found in the extenders. But the larger reason that major business leaders joined the White House in media events to pressure Congress to raise income taxes and make a fiscal cliff deal is the promise of corporate tax reform that would make it easier for multinational corporations to move money around.

They got two major elements of that in the extenders. A provision allows US companies operating overseas to convert “passive” profits like interest payments and rents into lower-tax “active” investment vehicles, largely benefitting financial services companies or industrials, like GE, with major financial units. Another provision allows tech and pharmaceutical companies to move intellectual property to subsidiaries in low-taxed or no-tax countries. These are the kinds of rules that allow companies like Pfizer and Google to pay low taxes, and recently attracted public censure for Starbucks in the United Kingdom.

These advantages are some of the reasons that corporations made such a killing in 2012 while paying so little in tax. But tax expenditures like the breaks in the extenders have attracted the scrutiny of fiscal wonks and lawmakers eager to take up comprehensive tax reform, and the logic of future fiscal deal-making leads toward a major overhaul. That will be a bonanza for corporate lobbyists, but with higher stakes. On one hand, the push to move the US away from its global tax regime could be a major victory for multinationals; on the other hand, the next mandate is more likely to be closing breaks than re-opening them.