In fringe Republican ideology, the ultimate aim is to abolish the current tax system and replace it with something euphemistically termed "simpler" -- a flat tax or a national sales tax. Either would most likely mean a big scale-back on how much the rich pay in taxes, and by necessity an increase in how much the middle class and the poor will pay. Either would by definition mean the end of progressive taxation, the present system in which the poorer pay fewer taxes, the richer pay more.

For a few hours it looked as if John Kerry's campaign might get the chance to expose Bush's "compassionate conservatism" for what it is -- a mask for the undoing of a fair social contract to benefit the moneyed class. Democrats pounced on Bush's remarks in the Panhandle, and a day later Bush's handlers at the White House were making it sound as if the president was speaking off-the-cuff. They went so far as to disavow the remark.

But the remark was not off the cuff. It was a well-calculated seed. On Thursday, the seed sprouted green. Speaking to a presidential commission that will make recommendations in July on overhauling the tax code, Federal Reserve Chairman Alan Greenspan said it's time to think of moving away from taxing income and to start taxing consumption instead. In other words your wages, profits on investments or your lottery winnings wouldn't be taxed. But your purchase of a house or an SUV or a pound of meat could be. (States, counties and cities levy such taxes already; the federal government would get in on the taxing.)

Greenspan isn't saying "national sales tax" outright. That might scare people down to their moderate Republican ranks the way President Bush's Panhandle remark did last August. Greenspan is going about it through the back door. He's proposing a big expansion of tax-free savings accounts as a start. But the aim is the same. The loopholes may vary. The objective won't.

Supposedly, a tax on consumption is more likely to encourage savings, because you'd be likelier to save $50 rather than spend it in the form of a 25 percent sales tax on a $200 DVD player. Savings mean more money for investment (and cheaper investment dollars). And more investment generally means stronger economic growth. A White House study last month estimated that consumption taxes would increase savings by 43 percent in the first year alone.

It's no mystery why Greenspan and Bush are lusting after any suggestion that might increase the national savings rate. The duo's zeal for tax cuts since 2001 opened the largest budget deficits in the nation's history -- deficits Greenspan on Wednesday disingenuously called "unsustainable." For now foreign countries are financing the nation's budget and trade deficits at the rate of $2 billion a day. That generosity, too, is unsustainable. American money will have to reclaim its debts at some point, or else the nation's finances will be held hostage to other nations' whims.

It's a matter of time before Greenspan or Bush begins speaking of domestic savings as a matter of national security, and selling a plan to Congress to move toward a consumption tax as such. A simple, measured retreat on the Bush tax cuts of the last four years is the fairer way to cut the deficits. But Greenspan and Bush won't hear of it. Which explains their ideological motive. It isn't about savings or taking care of the deficit. It's about changing the way Americans pay taxes.

The argument against a consumption tax is two-fold: Economically, it is not a given that a consumption tax in a consumption-driven society encourages savings. Consumption will take place one way or another. Not least, if consumption is discouraged in favor of savings, fewer products and services will be sold, fewer jobs created, and fewer taxes collected. Philosophically, a sales tax would be not only less progressive, but also less fair than a progressive income tax. It would almost by definition shift the tax burden toward those less able to pay. It isn't worth the imagined uptick in economic growth.

A more egalitarian economy growing at 3.5 percent a year is more desirable than a less egalitarian economy growing at 4.5 percent a year. An economically less egalitarian economy will ultimately moot that difference anyway: Inequality concentrates wealth, but ultimately reduces consumption by limiting the numbers of those who can consume the most. Add to that the inherent contradiction of a consumer economy suddenly consuming less, and long-term growth prospects dim gloomily.

So where are the gains of a consumption tax? They glitter in the short run, maybe. In the long run they're the ruin of a fair, progressive economy. Certainly.

Pierre Tristam is a News-Journal editorial writer.

© 2005 News-Journal Corporation

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