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A Solidly Republican House Crashes Down on Grover Norquist

6:54 am in Uncategorized by SJGulitti

At this point all I can do is laugh when I think about how some of my friends on the far right were naive as to think that sensible Republicans in Congress had failed to heed the message of the 2012 election and the current political realities borne therefrom. The latest development in the fiscal cliff drama show to what degree some on the right have regained their senses and moved back to the center, in the direction of much needed compromise. Quoting political commentator Jennifer Steinhauer: “Ending a climactic fiscal showdown in the final hours of the 112th Congress, the House late Tuesday passed and sent to President Obama legislation to avert big income tax increases on most Americans and prevent large cuts in spending for the Pentagon and other government programs. The measure, brought to the House floor less than 24 hours after its passage in the Senate, was approved 257 to 167, with 85 Republicans joining 172 Democrats in voting to allow income taxes to rise for the first time in two decades, in this case for the highest-earning Americans…The decision by Republican leaders to allow the vote came despite widespread scorn among House Republicans for the bill, passed overwhelmingly by the Senate in the early hours of New Year’s Day. They were unhappy that it did not include significant spending cuts in health and other social programs, which they say are essential to any long-term solution to the nation’s debt.” Clearly and unequivocally the resolution of the fiscal cliff represents a major defeat for Grover Norquist and his Tea Party allies as well as a significant victory for president Obama.

And what of those Republican Congressman who voted to let tax rates rise? Remember how often we’ve been told that almost every Republican in the House had signed Grover Norquist’s “No Tax Pledge.” Quoting Politico’s Alexander Burns and Maggie Habberman: “…given the lopsided Senate vote in favor of the tax-hiking measure, as well as the 85 GOP House members who voted yes, members of the GOP have violated the party’s no-new-taxes orthodoxy for the first time in two decades. It’s a significant concession in the aftermath of Mitt Romney’s November defeat and a potentially existential moment for a party that has prided itself on a defiant and dogmatic dislike of tax increases. What remains to be seen is whether that is merely a tactical retreat — bowing to the unique circumstances of the fiscal cliff — or a more meaningful cave-in on the part of Republicans who believe that their anti-tax platform has become politically unsustainable, particularly after a presidential cycle in which the party found itself caricatured as the puppets of the rich and powerful.” Perhaps it was the fact that a large majority of Republican Senators had voted for a tax hike that finally drove home the political reality to the 85 Republican Congressional legislators who decided to follow suit. Why even such staunch conservatives as Congressman Paul Ryan and Senators Patrick J. Toomey and Tom Coburn voted in favor of raising taxes. The fact that, in the face of a growing fiscal crisis, that Republicans voted to raise revenue via tax hikes, should come as no surprise as 2012 election exit polling showed 75% of the voters supported said increases, including a large minority of those who voted for Mitt Romney. Fox News contributor and prominent conservative commentator Charles Krauthammer opined: “This is a complete surrender on everything” and “a rout.” Not surprisingly, Norquist himself appeared on the cable circuit claiming to Anderson Cooper, among others, that the “deal was technically not a pledge violation”, but then what would you expect to hear from a guy who just went off of his own political cliff.

Many on the right have been seen to try to spin this defeat as a tactical maneuver that takes taxes off the table thereby enabling the G.O.P. to be more hard-nosed in dealing with the debt ceiling / spending cuts debate that we’ll be revisiting in a few months. But this too may amount to nothing but wishful thinking. Again quoting Burns and Habberman: “The president’s party, meanwhile, has no intention of easing up on a GOP they believe is in serious disarray. And while Republicans take heart from the hope that they’ll have more leverage in the next showdown, emboldened Democrats say the demand for “balanced” deficit reduction — meaning both spending cuts and new taxes — remains a challenge for their foes. Democratic pollster Geoff Garin, who advised the pro-Obama super PAC Priorities USA, called the fiscal cliff deal “a band-aid on a serious wound” for Republicans. “The sane wing of the Republican Party recognized the GOP was playing a losing hand badly on taxes in a way that was deeply damaging to the Republican brand,” Garin said. “The Republicans will find themselves in a similar mess going forward if they insist on entitlement cuts while resisting new revenues from closing loopholes and tax breaks for those at the top.”

In the final analysis, when the spin and the political posturing is put aside there is one simple fact that comes through as the dust settles in the aftermath of the fiscal cliff and that is that Barack Obama has just cashed in on some major political capital and the sensible conservatives knew he had it to use and fully intended to use it. Obama ran, in part, on solving the fiscal crisis by raising taxes on the richest among us and won. America had two clear choices to pick from and they didn’t pick the conservative version. Much has been made of the fact that the G.O.P. had held onto the House but they only did so as a result of redistricting. In terms of absolute votes cast for those running for Congress, across the nation as a whole, “Democratic candidates for Congress won 1.1 million more votes than Republicans, according to a tally of the popular vote kept by David Wasserman, the House editor of The Cook Political Report.” The Republican leadership in Congress knows that winning as a result of map making means a lot less politically than does winning by popular appeal and presently the G.O.P. ranks near the low end of its historic popularity. More importantly, the American people have demanded compromise and they indicated that they are clearly fed up with Tea Party obstruction on Capitol Hill. This had to be a motivating factor for Republicans as it is they, not Obama and the Democrats who would have been blamed for the country’s sliding back into a recession. In the end President Obama wound up giving less in the way of concessions than he would have just two weeks ago when he bargained with John Boehner in search of a deal and dramatically less than he would have back in 2011 when he and the Speaker were on the verge of a “Grand Bargain.” Such is the measure of the political shift that has taken place since the Tea Party victories in 2010 and Obama’s re-election this past November.

Steven J. Gulitti
1/2/2013

Sources:
Jennifer Steinhauer: “Divided House Passes Tax Deal in End to Latest Fiscal Standoff”; http://www.nytimes.com/2013/01/02/us/politics/house-takes-on-fiscal-cliff.html?pagewanted=2&_r=0&ref=todayspaper

“John Boehner, Eric Cantor Split On Fiscal Cliff Deal”; http://www.huffingtonpost.com/2013/01/02/john-boehner-eric-cantor_n_2395593.html?utm_source=DailyBrief&utm_campaign=010213&utm_medium=email&utm_content=FeatureTitle&utm_term=Daily%20Brief

Mike Allen and Jim VandeHei: “BEHIND THE CURTAIN — Why the GOP caved: The politics are horrible on the backside of the cliff”; http://www.politico.com/playbook/

“Tea party backers swallow a bitter pill in ‘cliff’ bill”; http://www.washingtonpost.com/politics/cliff-bill-is-a-bitter-pill-for-houses-tea-party-adherents-to-swallow/2013/01/01/5345286e-544d-11e2-8e84-e933f677fe68_story.html

“GOP anti-tax policy goes over the cliff”; http://www.politico.com/story/2013/01/gop-anti-tax-policy-goes-over-the-cliff-85657.html

Charles Krauthammer: “Cliff deal a ‘rout”; http://www.politico.com/story/2013/01/krauthammer-cliff-deal-surrender-85656.html?ml=po_r

“Why President Obama, Mitch McConnell took the deal”; http://www.politico.com/story/2013/01/why-mcconnell-obama-took-the-deal-85655.html#ixzz2Gr6BLtPZ

“Obama hails tax bill, warns GOP not to pick fight on debt ceiling”; http://thehill.com/homenews/administration/275123-obama-hail-cliff-deal-but-warns-gop-on-debt-ceiling

“How Maps Helped Republicans Keep an Edge in the House”; http://www.nytimes.com/2012/12/15/us/po

The Growing Revolt Against Grover Norquist

1:57 pm in Uncategorized by SJGulitti

Grover Norquist - Caricature

Grover Norquist - Caricature

Two weeks ago I penned a short piece titled “Grover Norquist Collateral Casualty of 2012?” where I broached the question of whether or not Norquist would become a casualty as a result of the coming fiscal cliff negotiations and where I said, “…look for Grover Norquist to politically take a major hit in the resolution of the fiscal cliff crisis.” The way things are playing out I think that we can pretty much assume that Norquist is already taking on water and his support and influence seems to be fading with each passing day. Let’s review a few recent developments, staring with this:”Grover Norquist: Washington Enemy No. 1 :The man who enforces the no-new-taxes pledge is under fire like never before. Why he still expects Republicans will hold the line”; To wit: “Republicans are facing an avalanche of pressure from the White House, the media and even many on Wall Street to abandon their antitax principles to avoid a “fiscal cliff…The pressure on Republicans to repudiate this oath has never been as intense as it is now. Mr. Obama is claiming a voter mandate to raise taxes, while the media and liberals are declaring that the days of “Norquistism,” as they derisively call it, are over. A New York Times story this week claimed that more Republicans are ready to violate the pledge. After the 2011 debt-ceiling debacle, the election losses and the prospect of getting blamed for going over the fiscal cliff, the conventional wisdom is that the GOP has no choice but to fold…I remind Mr. Norquist that the election exit polls show that voters, for the first time in two decades, favor higher taxes on the rich.”

In the Senate, several prominent Republicans have already broken ranks with Norquist publicly, Lindsey Graham (R-SC): “When you’re $16 trillion in debt, the only pledge we should be making to each other is to avoid becoming Greece, and Republicans — Republicans should put revenue on the table…We’re this far in debt. We don’t generate enough revenue. Capping deductions will help generate revenue. Raising tax rates will hurt job creation…So I agree with Grover, we shouldn’t raise rates. But, I think Grover is wrong when it comes to [saying] we can’t cap deductions and buy down debt…I want to buy down debt and cut rates to create jobs, but I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform.” Tom Coburn (R-OK): “I’m all for the very wealthy paying more taxes…Senate Republicans — and many House Republicans — have repeatedly rejected Mr. Norquist’s strict interpretation of his own pledge, a reading that requires them to defend every loophole and spending program hidden in the tax code…As a result, rather than forcing Republicans to bow to him, Mr. Norquist is the one who is increasingly isolated politically.” John McCain (R-AZ) said Sunday, “that he would support limiting deductions.” Saxby Chambliss (R-GA) who said last week that “the pledge is outdated and unhelpful for reducing the national debt…I care more about my country than I do about a 20-year-old pledge.” Bob Corker (R-TN): “I’m not obligated on the pledge…I made Tennesseans aware, I was just elected, the only thing I’m honoring is the oath I take when I serve, when I’m sworn in this January.” The senior Republican Senator from Tennessee, Lamar Alexander said that the only oath he’s taken is his oath of office.” Regarding taxes Alexander said’ “I think Republicans have done plenty of talking about revenues on the table…We’re ready. It’s time for the president to step up.”

Of even greater significance is the fact that the defections have now moved beyond the Senate, where Republicans are in the minority, to the Republican controlled House of Representatives. Even fiscal hawk Eric Cantor (R-VA) has publicly distanced himself from Norquist, “When I go to the constituents that have reelected me, it is not about that pledge…It really is about trying to solve problems.” While Cantor, like Graham isn’t a fan of raising the tax rates he is unequivocally in favor of increasing revenues and he doesn’t necessarily tie that to matching adjustments in deductions as required by the Norquist pledge. Peter King (R-NY) said, “everything should be on the table in negotiations to avert the “fiscal cliff.” Jeff Flake (R-AZ): “The only pledge I’d sign is a pledge to sign no more pledges…We’ve got to ensure that we go back and represent our constituents in a way — I believe in limited government, economic freedom, individual responsibility. I don’t want higher taxes. But no more pledges.” Quoting the political magazine “The Hill” on the comments of Congressman Tom Cole (R-OK): “Rep. Tom Cole (R-Okla.), a respected party strategist and former chairman of the National Republican Campaign Committee, became the most prominent House Republican to suggest that the GOP do what has long been unthinkable within the party: lock in the George W. Bush-era tax rates for annual incomes up to $250,000 without simultaneously extending them for top earners.” Diane White (R-TN): “I answer to my constituents, not to a pledge.”
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Grover Norquist Collateral Casualty of 2012?

9:34 am in Uncategorized by SJGulitti

In light of the election post mortems taking place among conservatives, perhaps no one is more delusional, with the exception of Karl Rove, than Grover Norquist. Norquist, a high priest of limited government, is having nothing to do with the reality borne of Mitt Romney’s defeat. Rather than to see in that defeat the rejection of four years of anti-government attacks and ideas, Norquist would have us believe that Tuesday night’s results have simply “confirmed the status quo of the 2010 election.” That’s an odd way of thinking about the election when one considers the fact that the entire contest was framed as a choice between two different paths for America and that roughly 60 percent of Americans agreed with president Obama’s views on taxes. If you read the National Review piece, written by Jim Geraghty the morning after, you would more likely believe that the Republican victory of 2010 was the anomaly and as such hardly represents the status quo. If Norquist’s political and economic arguments had taken hold, as many on the right believe they had, then Romney and the Republicans would have won by a landslide. Hence the notion that what we have here is a “confirmation” of the recent past is nothing more than a salve for bruised and disconsolate conservative egos. That said, while we may all be focused with laser like attention on the upcoming fiscal cliff, I fully expect to see Grover Norquist among the collateral casualties littering the political landscape in the aftermath of 2012.

Grover Norquist is famous for the “Taxpayer Protection Pledge” which obligates its signatories to “oppose increases in marginal income tax rates for individuals and businesses, as well as net reductions or eliminations of deductions and credits without a matching reduced tax rate.” In the abstract the pledge might seem a sound and reasonable approach to taxation, in reality it has little utility in the current economic and political environment and therein lays a fundamental problem for Norquist. In light of the looming fiscal cliff, with its necessity of raising revenues, coming as it has in the wake of Barack Obama’s victory, the likelihood that Norquist’s ideas will be adhered to are remote at best. Added to that reality is the fact that Americans want their entitlements to remain essentially intact while business leaders are now open to increasing revenues through tax reform. It is of particular significance that responsible business leaders see a need for increased revenues as they should normally be Norquist’s natural allies. To wit: “On Thursday morning, more than 80 executives of leading American corporations signed a statement calling for a deficit reduction compromise that would “include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.” Several members of the group, which includes highly paid chief executives of financial and industrial corporations who will stand to pay more if President Obama succeeds in his effort to raise taxes on the wealthy, then helped ring the opening bell at the New York Stock Exchange to draw attention to their coalition, Fix the Debt… But the business leaders’ position also contradicts the stand of Mitt Romney and other Republicans, who say that all tax increases are “job killers,” that the federal budget can be balanced with spending cuts alone and that any overhaul of the tax code should be “revenue neutral,” neither raising nor lowering the government’s total tax collection. “To say that you can solve this without increases in taxes is ludicrous,” said David M. Cote, the chief executive of Honeywell, a Republican and a member of Mr. Obama’s Bowles-Simpson fiscal commission in 2010. “Most wealthy people get it.” The underlying change in tone is clearly evident when even a stalwart critic of the Obama administration, the NeoCon Bill Kristol noted on Fox News “It won’t kill the country if we raise taxes a little bit on millionaires.”

In what can only be seen as a further weakening of Norquist’s anti-tax appeal is the fact that many of the Republican members of Congress who originally signed the pledge have by now distanced themselves from it. Those who have not have suffered politically: “While not all races have been called, at least 55 Republican House incumbents or candidates who signed the pledge — and 24 Republican Senators or hopefuls — lost on Tuesday. Linda McMahon (R-CT), Senator Scott Brown (R-MA), Treasurer Josh Mandel (R-OH), Secretary of State Charles Summers (R-ME), former Gov. Tommy Thompson (R-WI) all signed the pledge and were attacked by their Democrats opponents in face-to-face debates over the issue. All five were defeated in their Senate bids. State Sen. Tony Strickland (R-CA), Rep. Bob Dold (R-IL), State Sen. Richard Tisei (R-MA), and Rep. Frank Guita (R-NH) were also attacked by their House race opponents in debates for signing the pledge in this campaign or in the past. All four were also defeated. In fact, of the fifteen-plus House Republican incumbents who apparently lost re-election, every single one had signed Norquist’s pledge.” In another indication of the changing mood on taxes, a senior aide to one House Republican leader said, off the record, “The president won, and the tax cuts are ending, whether we like it or not. So we have to figure out how to deal with it.” Beyond this weakening in the commitment to the no tax pledge among individual members of Congress there is a renewed interest in the “Grand Bargain” on the part of the bipartisan “Gang of Eight”. These senators, who in the summer of 2011 had crafted a deficit compromise that was a combination of revenue increases and spending cuts, are already meeting to discuss the way forward. When considering the work of the “Gang of Eight” the operative word is compromise, something that the American people have overwhelmingly endorsed and one which Norquist and his followers have opposed. In the words of Tom Friedman who wrote a compelling article as to why Obama was reelected: “The country is starved for practical, bipartisan cooperation, and it will reward politicians who deliver it and punish those who don’t.” Grover Norquist are you listening or are you content with being on the wrong side of this issue?

Speaker of the House John Boehner has already signaled his willingness to compromise on fiscal reform to the point of raising revenues by eliminating loopholes as part of overall tax reform. While he may oppose raising marginal tax rates, and it’s not certain that he will prevail, Boehner’s willingness to increase revenues overall is a direct blow to Norquist’s anti-tax pledge which eschews any idea of revenue increases unless those are offset by further corresponding reduced tax rates. That said it would also appear that the results of 2012 have strengthen Boehner’s hand in dealing with the Tea Party crowd in the House. Former Secretary of Labor, Robert Reich, detailed the setbacks suffered by the G.O.P. in this election and concluded that considering all of the Tea Party induced setbacks: “Tuesday wasn’t exactly a repudiation of the Tea Party, and the public’s rejection of Tea Party extremism on social issues doesn’t automatically translate into rejection of its doctrinaire economics. But the election may have been enough of a slap in the face to cause Tea Partiers to rethink their overall strategy of intransigence. And to give Boehner and whatever moderate voices are left in the GOP some leverage over the crazies in their midst.” Apparently a significant number of House Republicans are already coming around to Boehner’s way of thinking as is indicated a recent New York Times article, “Boehner Tells House G.O.P. to Fall in Line”, referenced below. Ironically, if not almost comically, Grover Norquist himself seems to have sobered up to the new political realities stemming from the reelection of Barack Obama. He is now on the public record as saying “I’m for additional revenue. I’m not for tax increases.” But Norquist is also banking on the hope that any increase in revenues will be offset by a corresponding reduction in overall tax rates thereby conforming to his tax pledge philosophy. If that doesn’t happen then his pledge will have seen to have been violated by House Republicans. Seeing as House Republicans has evidenced much less in the way of loyalty to the “Taxpayer Protection Pledge” look for Grover Norquist to politically take a major hit in the resolution of the fiscal cliff crisis.

In the upcoming deficit reduction fight, Barack Obama presently holds most of the tactical advantages. For one, a central theme of his reelection campaign was tax fairness and it is he who won the election not the advocates of limited government. In staking out his position the president said: “I’m not wedded to every detail of my plan. I’m open to compromise. But I refuse to accept any approach that isn’t balanced…and on Tuesday night, we found out that the majority of Americans agree with my approach.” Secondly, Obama and the Democrats can force House Republicans into a compromise by using the fiscal cliff as leverage, threatening to allow higher tax rates and spending cuts to go into effect on January 1st and thereafter proposing tax cuts for the majority of Americans. Republicans will be put in the position of opposing tax relief for the bulk of the taxpayers in the event that they don’t agree to compromise with the Democrats. The last time we went to the brink of a fiscal cliff, it was the Republicans, not Obama and the Democrats who paid the price politically. This time the damage to Republicans can only be worse, particularly as the electorate demands bi-partisan compromise as noted above. Conservatives have their backs to the wall on this issue for other reasons as well. Several studies have come out and have “found no correlation between top tax rates and economic growth, a central tenet of conservative economic theory…The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.” The gravity of such a finding and its threat to Congressional Republicans is underlined by the fact that their leadership on Capitol Hill had the report withdrawn. Moreover, two recent reports from the Congressional Budget Office also bode ill for Republicans. One shows that the deficit can’t be reduced by spending cuts alone and that “significant deficit reduction is likely to require a combination of policies”; i.e. both spending cuts and revenue increases. The second details the damage that will be done if we go off the fiscal cliff: “According to CBO’s projections, if all of that fiscal tightening occurs, real (inflation-adjusted) gross domestic product (GDP) will drop by 0.5 percent in 2013 (as measured by the change from the fourth quarter of 2012 to the fourth quarter of 2013)—reflecting a decline in the first half of the year and renewed growth at a modest pace later in the year. That contraction of the economy will cause employment to decline and the unemployment rate to rise to 9.1 percent in the fourth quarter of 2013.”

From a political standpoint I hardly think that the Republican Party wants to be blamed for sending the economy back into recession and unemployment back over 9 percent and therein lays another advantage that favors the president. The bottom line is this, politically and tactically the president holds a better hand of cards than do his adversaries. With their most powerful card being politically unpopular continued obstruction they really don’t have a very powerful hand to play after all. The weakness of the Republican hand is particularly relevant as the upcoming fiscal negotiations will take place at the same time the G.O.P. is undergoing a period of deep soul searching as to why they lost an election that they theoretically should have won and to what degree Republican obstruction on Capitol Hill contributed to that defeat. That said look for Grover Norquist to be found among the collateral casualties that will result from a deficit reduction deal. There’s a better than average likelihood that Norquist and Co, are going to be going over their own political cliff and that his ideas will become less and less compelling as we move forward as a nation.

Steven J. Gulitti

11/11/12

Sources:

How Stand the Correlation of Forces in American Politics?; http://www.huffingtonpost.com/grover-norquist/republican-house-obama-reelection_b_2088071.html?utm_hp_ref=daily-brief?utm_source=DailyBrief&utm_campaign=110812&utm_medium=email&utm_content=BlogEntry&utm_term=Daily%20Brief

Jim Geraghty: And Now, the Most Depressing Morning Jolt Ever; http://www.nationalreview.com/campaign-spot/332940/not-less-painful-day-goes

Grover Norquist; http://en.wikipedia.org/wiki/Grover_Norquist

Business Leaders Urge Deficit Deal Even With More Taxes; http://www.nytimes.com/2012/10/26/us/politics/business-leaders-urge-deficit-deal-even-with-more-taxes.html

White House Plans Public Appeal on Deficit; http://online.wsj.com/article/SB10001424127887324894104578113022312251756.html?mod=ITP_pageone_1

More Republicans Rejecting Grover Norquist’s ‘No Tax Increases Ever’ Pledge; http://crooksandliars.com/blue-texan/more-republicans-rejecting-grover-norqu

GOP rookies buck Grover Norquist; http://www.politico.com/news/stories/0512/76470.html

How Grover Norquist’s Radical Anti-Tax Pledge Sunk Top Tier Republican Senate Candidates; http://thinkprogress.org/economy/2012/11/07/1159241/grover-norquist-pledge-albatross-vulnerable-candidates/?mobile=nc

Axelrod calls Boehner ‘encouraging’ ahead of ‘fiscal cliff’ negotiations; http://thehill.com/blogs/blog-briefing-room/news/267257-axelrod-obama-campaign-never-doubted-victory

The Looming Compromise on Revenues; http://open.salon.com/blog/steven_j_gulitti/2011/07/08/the_looming_compromise_on_revenues

Tom Friedman: Hope and Change: Part 2; http://www.nytimes.com/2012/11/07/opinion/friedman-hope-and-change-part-two.html?_r=1

Obama must lead effort to avoid fiscal cliff: Boehner; http://news.yahoo.com/obama-must-lead-effort-avoid-fiscal-cliff-top-164653450–business.html

Obama, Boehner Open to Budget Bargain; http://online.wsj.com/article/SB10001424127887324439804578108971200674876.html?mod=WSJ_Election_LEFTSecondStories

The Fever and the Cliff; http://thepage.time.com/2012/11/09/the-fever-and-the-cliff/?xid=newsletter-thepagebymarkhalperin

Robert Reich: Why John Boehner May Have More Leverage Over the Tea Partiers in Congress; http://www.huffingtonpost.com/robert-reich/boehner-fiscal-cliff-negotiations_b_2093390.html?utm_hp_ref=daily-brief?utm_source=DailyBrief&utm_campaign=110912&utm_medium=email&utm_content=BlogEntry&utm_term=Daily%20Brief

Boehner Tells House G.O.P. to Fall in Line; http://www.nytimes.com/2012/11/11/us/politics/boehner-tells-house-gop-to-fall-in-line.html?ref=todayspaper

Norquist OK with Boehner tax stance; http://thehill.com/blogs/on-the-money/domestic-taxes/267211-norquist-okay-with-boehner-tax-stance

Pressure Rises on Fiscal Crisis; http://professional.wsj.com/article/SB10001424127887324894104578107363250113122.html?mod=WSJPRO_hpp_LEFTTopStories

Sen. Murray: Dems would let Bush-era rates expire before taking ‘unfair deal’; http://thehill.com/blogs/blog-briefing-room/news/267253-sen-murray-dems-would-let-bush-era-rates-expire-before-taking-unfair-deal

Congress Sees Rising Urgency on Fiscal Deal; http://www.nytimes.com/2012/11/09/us/politics/congress-sees-rising-urgency-on-fiscal-deal.html

Nonpartisan Tax Report Withdrawn After G.O.P. Protest; http://www.nytimes.com/2012/11/02/business/questions-raised-on-withdrawal-of-congressional-research-services-report-on-tax-rates.html

C.B.O. Choices for Deficit Reduction; http://www.cbo.gov/publication/43692

C.B.O. Economic Effects of Policies Contributing to Fiscal Tightening in 2013; http://www.cbo.gov/publication/43694

Obama, Boehner Open to Budget Bargain; http://online.wsj.com/article/SB10001424127887324439804578108971200674876.html?mod=WSJ_Election_LEFTSecondStories

Patriotic Millionaires for Fiscal Strength vs Grover Norquist

7:41 pm in Uncategorized by SJGulitti

By now you’ve probably heard of the organization called Patriotic Millionaires for Fiscal Strength. They are patriotic Americans who know that they have accumulated the wealth that they have as a result of the uniqueness of the American system and they now want folks like themselves to help the system in its hour of crisis. Patriotic Millionaires has advocated that “the highest earners should pay 39.6 percent in taxes, up from the current 35 percent.”

Recently six of them sat down with America’s anti-tax guru grover Norquist for a discussion on taxes and the role of government. Here’s an excerpt: “[Norquist] raised an issue we get all the time which is, ‘Well there’s nothing stopping you guys from paying higher taxes, just send a check to the government!’ And this to me is frankly an absurd position; I don’t consider it to be a very serious argument. Government is not a charity and we can’t rely on voluntary contributions from people to support the things that government does. And I also said to him, ‘Look would you be willing to sign a pledge where you’re willing to forgo all the benefits that government provides? Are you willing to sign a pledge that says you don’t want the U.S. military to protect you? That you will refuse to contact the police if somebody steals from you? That you will refuse to contact the fire department if your house is on fire? Because that’s the equivalent! Why should you get a free ride? Why should you benefit from my willingness to support the government? Let’s do it together.’ And he said, ‘If I don’t have to pay any taxes for it, I would forgo all those things!’ To which my response was, ‘Well there’s an easy way to do that, move to Somalia!’ And his argument was, ‘Somalia doesn’t suffer from too little government, it suffers from too much government.’ I don’t even begin to understand what that means, but again there’s only so much you can go into in these conversations.”

As it turns out many Republican lawmakers are abandoning Norquist and his “No Tax Pledge” as they get down to seriously dealing with this country’s fiscal crisis. The conservative organ NewsMax points out: “Republican House members are increasingly separating themselves from Grover Norquist and Americans for Tax Reform, the interest group he leads. Specifically they’re disconnecting from ATR’s pledge to oppose any tax increase, The Hill reports.” Quoting Ohio Congressman Steven LaTourette, He said he didn’t even recall joining the pledge until Norquist’s group found the original document earlier this year. And he doesn’t view it as a permanent commitment. “My driver’s license expires. The milk in my refrigerator expires. My gym membership expires, and I find the website to be a little deceptive,” Moreover: “Republican Reps. Howard Coble of North Carolina, Pete King of New York, and Lee Terry of Nebraska, told The Hill they signed the pledge more than 10 years ago, but not for the current Congress. They were among 40 House Republicans who signed a letter to the super committee last week urging a grand bargain including more tax revenue, entitlement reform, and spending cuts.”

I think at this point its more than apparent that Grover Norquist and his “No Tax Pledge” will have to bend to the winds of political necessity, either that or they’ll be broken and left by the side of the road on the march to fiscal reform in America.

Sources:

Patriotic Millionaires To Grover Norquist: ‘Move To Somalia’; http://www.huffingtonpost.com/2011/11/17/patriotic-millionaires-grover-norquist-somalia_n_1098473.html?ref=politics

House GOP To Norquist: Our Tax Pledge Expired; http://www.newsmax.com/InsideCover/norquist-tax-pledge-gop/2011/11/09/id/417423

House GOP To Norquist: Our Tax Pledge Expired; http://www.freerepublic.com/focus/f-news/2805082/posts

The Tea Party, Taxes and Spending Cuts‏

10:48 am in Uncategorized by SJGulitti

A key goal of the Tea Party movement is the reduction of the national debt and thus the size of government via spending cuts. However, it is highly unlikely that the federal deficit can be reduced through spending cuts alone. That said if the Tea Party movement harbors such a fundamental opposition to tax increases and revenue enhancements and those measures are required in order to effect the deficit reduction they hope to achieve, how can the movement can ever hope to be successful.

It was a perquisite that those seeking Tea Party support in the 2010 elections for the House and Senate sign a statement stating that they would never raise taxes or eliminate tax breaks in attempt to reduce the federal deficit. This may prove a pledge that cannot be kept for those who ultimately want to lower the deficit. Two of the three major deficit reduction panels, the National Commission on Fiscal Responsibility and Reform, co-chaired by, Republican Alan Simpson and Democrat Erskine Bowles, and the Bipartisan Policy Center’s Debt Reduction Task Force, co-chaired by former CBO Director Alice Rivlin and retired Senator Pete Domenici (R-NM), have both included revenue enhancements as part of deficit reduction. Quoting political reporter Jackie Calmes: “The sponsors of the plans say that the scale of the nation’s fiscal problem is too great to resolve without both raising taxes and cutting projected spending on Medicare, Medicaid and Social Security, all popular entitlement programs.” It is these recommendations that are at the center of the bipartisan discussion currently underway in the Senate. While those on the far right will continue to insist that the deficit can be reduced by spending cuts alone, the political reality is that the discussion in Washington has now moved beyond that argument and the facts reveal that there is some degree of bipartisan support for revenue enhancements in any deficit reduction package.

A growing minority within the G.O.P. is also making the case that the projected debt is too big to handle simply by cutting spending. In the run up to the 2010 elections, Saxby Chambliss (R-GA) observed: “Everything has got to be on the table for discussion… “there are a lot of things people are going to have to be educated about, on the spending side as well as the revenue side.” Chambliss is now one of the “Gang of Six” senators involved in negotiations as to how to implement the deficit reduction panel’s proposals. Since the panels findings have made it into the discussion on deficit reduction, Chambliss stated, “We’ve got to have an increase in revenues to be able to retire this debt.” Chambliss appearing on CNN in April said, “Now, if we don’t want to pay the debt back, then we could just not worry about the revenues. But the fact is we’ve got a $14 trillion debt staring us in the face, and revenues have to be on the table if we’re serious about attacking that debt.” Tom Coburn (R-OK), who had been a “Gang of Six” member, has parted company with those who rule out revenue enhancements. Appearing on Meet the Press in April Coburn said that increasing revenues may be required in order to address the deficit issue and in an NPR piece, he indicated that the solution to the deficit problem may involve tax increases. Coburn’s stance has touched off an internecine feud within the ranks of conservatives as well. Grover Norquist of the Americans for Tax Reform, the creators of the anti-tax pledge, criticized Coburn on his change of heart as it relates to tax increases. Coburn in responding to a question on Meet the Press has in turn dismissed Norquist and his organization as being nothing more than just another anti-tax lobbying group: “Which pledge is most important, David, The pledge to uphold your oath to the Constitution of the United States? Or a pledge from a special interest group who claims to speak for all of American conservatives, when in fact they really don’t?”

Now, even though he seems to have temporarily left the Gang of Six, Coburn continues to point to the need for revenue enhancements. To wit: “But look, realistically we cannot solve our problems unless we generate growth in this country, and the only way we’re going to do that is back off on a lot of regulations, create a tax structure that’s going to cause investment to happen, and get dynamic returns that actually increase the revenues coming to the federal government. We can’t do it all by eliminating large sections and duplicate spending and waste. We can do a large portion of it, but there has to be some revenue component to that, and anybody that says that’s not the case, I think they’re just wrong and they’re not thinking about the long-term health of our country.”  James Thurber, an expert on congressional affairs at American University points out: “It’s significant that both Chambliss and Coburn see increased revenues as part of the solution to chronic deficits… This is the beginning of a crack, which may allow for a deal, Thurber says. “Norquist will try to stop it, and it will be a major confrontation between the Republican senators and Norquist.” Thus while the hot rhetoric flies back and forth on the political street, in the chambers of the Senate, all manner of measures are being considered in deficit reduction strategy sessions.

It’s not only practical politicians on the right who have abandoned the idea that the deficit could be addressed by spending cuts alone, conservative sources outside the Beltway are weighing in on the need for revenue enhancements as well. Quoting David Stockman: “It is obvious that the nation’s desperate fiscal condition requires higher taxes on the middle class, not just the richest 2 percent. Likewise, entitlement reform requires means-testing the giant Social Security and Medicare programs, not merely squeezing the far smaller safety net in areas like Medicaid and food stamps.” The Wall Street Journal’s David Wessel pointed out that the ideas contained in Paul Ryan’s budget plans will actually lead to tax increases due to Ryan’s faulty math and unrealistic assumptions as to what can be done and how. In addition, the nonpartisan Tax Foundation makes the following observation: “Overall, this feed the beast question is the core question that conservatives must answer before taking a position on the role of tax hikes in solving the long-term budget problem. If feed the beast isn’t a problem at all, but you still hold deep to your no tax hike position so as to support fiscal insolvency which would trigger enormous tax hikes, your position is so illogical that you don’t deserve to be part of the debate.” Martin Feldstein, former Reagan Economic Advisor, made the following observation, “Reducing the budget deficit and stopping the explosion of our national debt will require more tax revenue as well as reduced government spending. But the need for more revenue needn’t mean higher tax rates. As the bipartisan fiscal commission appointed by President Obamastressed last year tax revenues can be increased substantially by limiting the deductions, credits and exclusions that are essentially government spending by another name.” Likewise, even the conservative National Journal says that revenue increases have to realistically be on the table.

Are there still those among the newly elected Tea Party caucuses that are insisting on reducing the national debt and the size of government but spending cuts alone, of course there are but their actual influence is now hardly the force it was once thought to be. What is important to note is that these people will not have the final say in the ultimate policy outcome. I predict the scenario will play out as follows. The Tea Party Caucus in the House of Representatives will continue to clamor for drastic cuts in spending and no increase in taxes or revenues and Speaker Boehner will continue to parrot that line right up until the last minute upon which he will take his proposals to the Senate only to have them rejected. Thereafter, Boehner will return to the House, just as he did during the Continuing Resolution debates, where he will inform the Tea Party crowd that what they had hoped to accomplish is not in the cards politically. Like the situation related to the Continuing Resolution, the final product will be the result of compromise not political extremism and that compromise will be tempered by the fact that the Democrats control the Senate and Obama wields the veto pen. Thus, the only choice that the House Tea Party Caucus will have available to it will be a solution that is quite different from the philosophy of its core beliefs. The ultimate result will be that those who came to Washington with the idea that they could reduce the deficit and size of government by spending cuts alone will be in for a rude awakening sooner rather than later. There is no way that can be seen as good news for the Tea Party. After all, if you cannot come through on one of the single most important planks in your platform, what can you do? Therein lies what could be the single greatest threat to the continued existence of the Tea Party. If you cannot even remotely accomplish that which you set out to achieve, why would anyone continue to be attracted to your core philosophy or vote for your candidates? Hence, the ultimate fallout from this great debate before us on raising the national debt limit and the concomitant discussions related to taxes and spending may very well be the end of the beginning for the Tea Party movement as a force in American politics.

 
 
Steven J. Gulitti
May 23, 2011
 
 
 
Sources:
 
 
Can Deficit Reduction Panels Get Congress’ Attention
 
Obama Deficit Panel Gets Some Competition
 
Jackie Calmes: Deficit Panels Go Where Politicians Won’t
 
‘Gang of Six’ may solve U.S. debt mess
 
On Deficit Proposals, a Failure of Will and Not Ideas
 
Meet the Press – Showdown Over Spending, Room for Compromise?
 
NPR: Conservative Heavyweights Trade Jabs Over Taxes
 
Sen. Coburn: Americans for Tax Reform a Special Interest
 
One-on-One with Senator Tom Coburn
 
Raise Taxes, but Not Tax Rates
 
David Stockman: The Bipartisan March to Fiscal Madness
 
David Wessel: New Proposal Hits Old Hurdles of Budget Math
http://online.wsj.com/article/SB10001424052748703806304576245023533534178.html
 
Tax Foundation: Should Conservatives Favor Tax Hikes to Solve Long-Term Budget Gap? An Outline to Answering the Question

Tax Cuts and Their Efficacy: A Postscript

7:21 pm in Uncategorized by SJGulitti

In two previous articles, “Maintain Tax Cuts for the Rich? Americans Don’t Seem to Buy the Conservative Argument” and the “Efficacy of Tax Cuts Is now Questioned” I laid out two basic premises. One was that a majority of the American people did not buy into the conservative argument that tax cuts had to be maintained for the richest among us. The second was that the use of tax cuts in this type of economic downturn had been called into question by some very prominent economists and that those same economists just happen to be on the right side of the political spectrum. The notion that tax cuts are of little use in this particular economic environment received further support last week with the publishing of the findings of the nonpartisan Congressional Budget Office from which the following conclusions were drawn: “ The concept of lower taxes is so appealing to voters that many embrace them as an economic cure-all… But economic research suggests that tax cuts, though difficult for politicians to resist in election season, have limited ability to bolster the flagging economy because they are essentially a supply-side remedy for a problem caused by lack of demand.

The nonpartisan Congressional Budget Office this year analyzed the short-term effects of 11 policy options and found that extending the tax cuts would be the least effective way to spur the economy and reduce unemployment. The report added that tax cuts for high earners would have the smallest “bang for the buck,” because wealthy Americans were more likely to save their money than spend it….Neither of those options, though, would do as much to stimulate the economy as offering direct payments to the unemployed and Social Security recipients or reducing the payroll taxes of workers, the study found…So while the decision on whether to extend the tax cuts will have a lasting impact on the deficit and on how the nation’s tax burden is distributed, economists and tax experts say it is unlikely to offer much immediate relief for high unemployment and sluggish growth… It may have some small impact along the margins, but firms don’t hire based on tax breaks; they hire based on demand,” said Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center. “So a lot of the tax breaks are likely to be rewarding people and companies for what they were going to do anyway.”

As a footnote to the above, it’s also of note that another prominent conservative has come to criticize the notion that tax cuts would be economically effective today. David Frum, a former Bush speechwriter and Fellow at the ultra conservative American Enterprise Institute, in an interview on NPR’s Marketplace said the following:” The recession began when all the Bush tax cuts were fully in effect. And yet, it’s suggested that re-enacting the tax cuts will somehow cure the crisis that those same tax cuts failed to prevent.” Don’t get me wrong, Frum is not endorsing the Obama Administration or its economic policies, not by a long shot. What he is saying, that is relevant to my premise is that those who are banking on tax cuts to pull us out of the current predicament are sadly mistaken as to their usefulness. Many would argue that tax cuts can only work if they are coupled with spending cuts, but to think that the government could reign in spending in the midst of this type of downturn requires a quantum leap of faith that would come with the notion that removing one of the only simulative elements remaining in the economy would somehow not cause the recession to worsen. This point was further underlined recently on Meet the Press. When pressed by moderator David Gregory, the Republican Minority leader, Mitch McConnell, declined to commit to spending cuts if the GOP took control of Capitol Hill. The bottom line is this: those on the far right fringe who parrot 18th and 19th Century economic concepts seem to strangely factor out the social chaos that would result from an ideology that was better suited for the world of Charles Dickens than the globalized world of today. The Republicans who hope to capture Capitol Hill in a few short weeks know this as well that’s why they are reluctant to go on the record and say otherwise.

A corollary argument that is used to support the extension of tax cuts to those families earning over $250,000.00/year is that idea that if this tax break is eliminated, that job creation will suffer. Here again there seems to be little in the way of empirical evidence to support this claim. A recent article; “Tax Increases Would Hit Few Small Businesses”; summarized the findings of the IRS and it’s Joint Committee on Taxation as follows: “Despite that emotional appeal, Internal Revenue Service statistics indicate that only 3 percent of small businesses would be subject to the higher tax, and many studies of previous tax increases suggest that it would have minimal impact on hiring… According to the Joint Committee on Taxation, 97 percent of all businesses owners do not earn enough to be subject to the higher rates, which would be levied on income of over $200,000 for individuals and $250,000 for families…But much of the research over the last two decades has found that increases in top tax rates can lead to an increase in the formation of small businesses, as wealthy individuals apparently begin start-ups to avail themselves of the more generous tax breaks offered to businesses… Higher taxes may lead individuals to seek self-employment because the opportunities for tax evasion and avoidance are greater,” according to a report released this month by the nonpartisan Congressional Research Service, which surveyed more than 20 studies on the effects of taxes on hiring."

Thus it seems that the hue and cry about the dangers to job creation at the level of small business may in fact be greatly exaggerated after all, yet one more political football flying about amidst all of the misconceptions that relate to the issues of tax policy and it’s applicability in the midst of the worst downturn since the 1930s. It’s important to note that I am not against tax cuts per se; it’s just that they are not and never have been a cure all too economic ills. That said; the monotonous reiteration of the sanctity of tax cuts in this particular environment seems to amount to nothing more than the political posturing of those who are at a loss for good ideas as to what we need to do to repair the damage done over the past thirty years of deregulation and bubble economics.

With regard to the fact that most Americans don’t support extending tax cuts to the wealthiest, the latest New York times/CBS poll supports what the last Gallup Poll showed: “The poll found that 53 percent of Americans say Mr. Obama’s proposal to increase taxes on households earning $250,000 or more is a good idea, and 38 percent say it is a bad idea.” Thus once again as was previously pointed out, the disappointment and anxiety of rank and file Americans does not translate into empathy for the woes of the most fortunate among us.

Steven J. Gulitti

9/20/10

Sources:

1) News Analysis: Tax Cuts May Prove Better for Politicians Than for Economy ; http://www.nytimes.com/2010/09/11/business/economy/11tax.html?emc=eta1

2) New York Times/CBS News Poll September 15, 201http://documents.nytimes.com/new-york-timescbs-news-poll-new-york-timescbs-news-poll-mood-of-the-country-as-midterms-approach?ref=politics

3) Tax Increase Would Hit Few Small Businesses; http://www.nytimes.com/2010/09/18/business/smallbusiness/18smallbiz.html?emc=eta14)

4) Old assumptions equal a stagnant economy; http://marketplace.publicradio.org/display/web/2010/09/01/pm-old-assumptions-equals-a-stagnant-economy/

5) Meet the Press 8/22/10

http://thepage.time.com/details-mcconnell-on-presidents-commission-on-cutting-deficit/

Maintain Tax Cuts for the Rich? American’s Don’t Seem to Buy The Conservative Argument

7:07 pm in Uncategorized by SJGulitti

We constantly hear the monotonous refrain from the right that now is not the time to raise taxes, even for the richest Americans, citing that this will somehow threaten the weak and halting recovery. Yet a composite number of 59% of the American people either favor the expiration of tax cuts for the wealthiest or a roll back of the Bush era tax cuts entirely as per the latest Gallup Poll. But oddly enough, it’s not just the folks on Main Street who feel this way; it’s also the sentiment of a few prominent thinkers on the right hand side of the political spectrum.

Take former Reagan OMB Director and economist David Stockman for example. He has emphatically been critical of the gains made by the richest Americans of late: “I find it unconscionable that the Republican leadership, faced with a 1.5 trillion deficit, could possibly believe that good public policy is to maintain tax cuts for the top 2 percent of the population who, after all, have benefited enormously from this phony boom we’ve had over the last 10 years as a result of the casino on Wall Street.” Stockman reinforced this point a few days later in an article entitled Four Deformations of the Apocalypse: “It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.” Not to be missed is the opinion of Alan Greenspan who likewise has been critical of the G.O.P’s stance on eliminating tax breaks for those who need them the least. To wit: “Now Mr. Greenspan is wading into the most fierce economic policy debate in Washington — what to do with the tax cuts adopted, in large part because of his implicit backing, under President George W. Bush — with a position not only contrary to Republican orthodoxy, but decidedly to the left of President Obama. … Asked whether higher taxes in 2011 could choke off the nascent recovery, Mr. Greenspan replied: “It is risky, but the choice of not doing it is far riskier."

Taking the above into consideration the next question is: Will it be a winning strategy for the G.O.P. to continue to support tax breaks for the richest Americans when the support for that policy is not supported by a majority of those polled? In the long haul, I believe it’s a losing proposition for the G.O.P. to carry on about the well being of a relatively few in our society when so many are still having such a difficult time. There’s also the undeniable element of partisan politics in all of this. One can only ask the following question: If the leadership of the Republican Party is so up in arms over the Obama Administration’s proposal to adjust the tax level of the richest Americans back to levels in effect during the Clinton Administration, then were was their opposition to Ronald Reagan who presided over tax rates that were higher during his administration than those in existence during the Clinton Administration? Well, you can bet your bottom dollar that this is one discussion that neither Mitch McConnell nor John Boehner is going to be too anxious to have on the Sunday morning talk show circuit.

Steven J. Gulitti
9/10/10

Sources:

Americans OK Allowing Tax Cuts for Wealthy to Expire; http://www.gallup.com/poll/142940/Americans-Allowing-Tax-Cuts-Wealthy-Expire.aspx

Stockman: Bush Tax Cuts Will Make U.S. Bankrupt; http://www.npr.org/templates/story/story.php?storyId=129052425&ft=1&f=1014

Four Deformations of the Apocalypse; http://www.nytimes.com/2010/08/01/opinion/01stockman.html?pagewanted=2&emc=eta1

Greenspan Calls for Repeal of All the Bush Tax Cuts ; http://www.nytimes.com/2010/08/07/business/economy/07greenspan.html?_r=1&emc=eta1