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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

12:38 pm in Uncategorized by SJGulitti

Against the backdrop of heightened political rhetoric among conservatives about not being willing to raise tax revenues as part of the deal to raise the debt ceiling, there is a growing acknowledgement among many Republicans in Washington as to the ultimate need to increase revenues. While many on Capitol Hill continue to parrot conservative talking points about not increasing tax revenues, the political leadership within the G.O.P. and outside the Republican Party is sounding more and more amenable to some form of raising revenue, even if it is structured as tax reform.

In an interview that came in under the radar following the collapse of the debt talks chaired by Vice President Biden, Republican insider and former congressman Vin Weber appeared on the PBS News Hour to discuss the emerging cracks in Republican opposition to raising taxes to curb the deficit. This controversy is clearly evident in the ongoing public spate between Grover Norquist of Americans for Tax Reform and Senators Tom Coburn (R-OK) and Saxby Chambliss (R-GA) over what actually constitutes a tax revenue increase and the necessity of increasing revenues. Weber stated of Republicans engaged in deficit negotiations: “And I think, if they’re allowed to define, on their own terms, what constitutes a tax increase that opens the door to a broad tax reform that might broaden the base by closing loopholes and eliminating deductions and credits and exemptions, probably coupled with a reduction in top rates to spur economic growth, but resulting in a net tax increase.” As you may recall, Norquist’s Americans for Tax Reform had circulated a Taxpayer Protection Pledge to conservative politicians for their signature ahead of the 2010 elections which many, particularly members of the Tea Party, signed. The Pledge includes the following wording “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.” Thus the pledge, a document of the utmost importance on the far right, not only prohibits tax increases; it opposes any effort to raise revenue through the elimination of loopholes, deductions and credits “unless matched dollar for dollar by further reducing tax rates.”

In the time that has elapsed since Weber’s PBS interview Speaker of the House, John Boehner (R-OH) has approached the White House with a proposal for $ 1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts, including in such social programs as Medicare, Medicaid and Social Security. According to White house officials, “Mr. Boehner suggested that he was open to the possibility of $1 trillion or more in new revenue that would be generated by addressing tax issues already raised in the talks, like killing breaks for the oil and gas industry, eliminating ethanol subsidies and ending preferential treatment for corporate jets. But those changes would fall far short of the revenue goal, and the source of the rest of the money would, under what they described as Mr. Boehner’s proposal, be decided by Congress through a review of tax law changes. One official said some revenue could be generated by allowing Bush-era tax cuts for affluent Americans to expire at the end of 2012, which would produce hundreds of billions of dollars, though those savings would be offset by the costs of retaining lower rates for those below the income threshold.” Eric Cantor (R-VA), who had walked out of the Biden talks and who has previously been a staunch opponent of raising revenues was quoted on PBS on July 6 as saying that he was willing to talk about closing loopholes and his fellow Republican in the Senate, Mitch McConnell (R-KY) likewise was quoted on the same program, “I’m open to tax reform. We need to do it broadly… Everybody’s going to have to contribute to it in one way or another.” Why even Tea Party backed Senator Mike Lee (R-UT) was on the news this evening saying that he was not necessarily opposed to raising revenues as long as it didn’t involve an increase in tax rates.

There is one other factor to consider in this whole discussion and that’s the current opinion of the American people. The latest Pew Research Polling on the subject: “Public Wants Changes in Entitlements, Not Changes in Benefits; GOP Divided Over Benefit Reductions”, reveals an American public that on a two to one basis feels that keeping entitlements the way they are is more important than reducing the deficit. Likewise similar levels of support are evident for other issues such as Medicare cost responsibilities and whether or not poor people should have their Medicaid benefits taken away. In fact if you go inside the numbers what you see is that even less affluent Republicans are now opposed to reductions in entitlements. While the political class and its attendant punditry are embroiled in discussing what to cut and where to raise revenues, the American people, even though they know that some type of reform is required, have expressed an emphatic desire to leave their benefits largely unchanged. Thus the Republican leadership in Washington has to maneuver between a public that wants it’s entitlements left alone, a Tea Party faction that has yet to understand that compromise is part of governing and the prospect of throwing our economy and the world economy along with it, into the tailspin that would result if we were actually to default on our Treasury obligations by failing to raise the debt ceiling.

The bottom line on the issue of raising revenues as part and parcel of a debt deal is that opposing such measures is a lose-lose proposition. Republicans came to power in the House in 2010 with the idea that getting the debt under control was one of the most important issues facing the nation today. Few reputable economists have taken the position that the debt could be reduced by spending cuts alone, thus revenue increases of some sort are required. To forgo increased revenue is to fail in the effort to reduce the debt, which for the G.O.P. is a loser. However, to consider revenue increases after having campaigned on no new tax increases of any type is a loser as well and as such any debt deal compromise that includes revenue increases can only be seen as a setback for the Republican Party. But beyond the fortunes of the Republican leadership are those of the Tea Party movement. Any debt deal that contains a significant increase in federal revenues can only be seen as a major setback for the Tea Party movement as well seeing as opposition to increased federal revenue has been a major reason behind the movement since its arrival on the political landscape.

Steven J. Gulitti
7/7/11

Sources:

Sen. Cornyn to Obama: Take Tax Increases Off the Table: http://www.pbs.org/newshour/bb/politics/july-dec11/budget_07-05.html

Cracks Emerge in Republican Opposition to Raising Taxes to Curb Deficit: http://www.pbs.org/newshour/bb/politics/jan-june11/goptaxes_06-24.html

Americans For Tax Reform: Taxpayer Protection Pledge;

http://www.atr.org/taxpayer-protection-pledge

Obama to Push for Wider Deal With G.O.P. on Deficit Cuts; http://www.nytimes.com/2011/07/07/us/politics/07fiscal.html?emc=eta1

Lawmakers Remain Divided on Deficit Fundamentals as Deadline Draws Closer; http://www.pbs.org/newshour/bb/politics/july-dec11/deficit_07-06.html

Public Wants Changes in Entitlements, Not Changes in Benefits; GOP Divided Over Benefit Reductions;http://people-press.org/2011/07/07/public-wants-changes-in-entitlements-not-change-in-benefits/

Boehner Must Navigate Rocky Road to a Budget; http://www.nytimes.com/2011/06/25/us/politics/25fiscal.html?emc=eta1