Blaming Grover
Apparently Rex Nutting didn’t get the memo. Nutting, a
Marketwatch columnist who is the poster child for the maxim that a
master’s degree doesn’t mean you actually know what you’re talking
about, lists Grover Norquist eighth on his
list of “10 people who led us to the ‘fiscal cliff.’”
Eighth!
By listing Mr. Norquist, the President of Americans for Tax
Reform and perhaps the most successful individual bulwark against
higher income tax rates for two decades, behind former President
George W. Bush and the chief economist for the National Association
of Realtors in terms of responsibility for the “fiscal cliff,”
Nutting has obviously missed the talking points that Democrats are
trumpeting and useful idiots are parroting.
Sadly, by “useful idiots” I don’t mean the media, whose
complicity in the growth of government is perennial, as much as I
mean gullible Republicans, desperately seeking to be seen as
participating in “cooperation” and “balance,” code words which mean
today what they always mean: Republicans buying into Democrat
proposals and getting little or nothing in return.
The biggest arrow in Grover Norquist’s quiver is the Taxpayer
Protection Pledge which
ATR asks candidates to sign, and which most Republicans do indeed
agree to with at least superficial enthusiasm. By signing,
politicians promise to “oppose any and all efforts to increase the
marginal income tax rates for individuals and/or businesses; and…
oppose any net reduction or elimination of deductions and credits,
unless matched dollar for dollar by further reducing tax
rates.”
In the upcoming 113th Congress, there are 219 Representatives
and 39 Senators who have
signed the pledge. With the exception of Rep. Robert Andrews
(D-NJ), all the signers are Republicans. Sixteen GOP House members
have not signed, along with six GOP senators although at least two
(Jeff Flake of Arizona and Tom Barrasso of Wyoming) are not likely
to succumb to the worst of Potomac Fever.
Unfortunately, several of those who have signed are now showing
indications of Gelatinous Spine Syndrome, a Republican-selective
symptom of Potomac Fever which precedes total collapse of both
spine and cerebrum and allows a senator to be elected in Maine.
Republican senators who are walking away from their “no tax
increase” pledge include not just the usual suspects such as
Lindsey Graham (SC) and John McCain (AZ), but relative newcomers to
such intense levels of squish, such as Bob Corker (TN) and Saxby
Chambliss (GA). Even Jeff Sessions, usually more reliable than
other veteran GOP senators, seems to be mistaking “the political
reality of the president’s victory” for a non-existent mandate to
implement highly destructive tax policy. Political epidemiologists
are very worried about the spread of the disease from the Northeast
into the previously resistant South.
Republican House Leadership has only been slightly better, with
Speaker of the House John Boehner (OH) saying he opposes tax rate
hikes, but being open to “putting revenue on the table.” And of
course, we will all be persistently reminded by a helpful media
that a year ago Boehner called Norquist “some random person.”
House Majority Leader Eric Cantor (VA) is trying to thread the
narrowest of needles, saying “When I go to the constituents that
have reelected me, it is not about that pledge. It really is about
trying to solve problems.” One wonders whether the air in the
MSNBC studio confused Rep. Cantor; after all, what real problem
can be solved by draining the private sector of much-needed capital
in order to enable the spending addiction of our federal
government?
I may be projecting, but is the nation not hungering for leaders
who would fit ESPN commentator Jon Gruden’s description of
Philadelphia Eagles’ head coach Andy Reid: “He does not feel
pressure; he applies it”? Apparently our “leading” politicians
don’t have the courage to find out.
Senator Corker, in an effort to appear to be showing leadership
(“let’s hurry up and compromise!”), is proposing a bill which he
expects to raise $1 trillion in revenue (over a decade) as part of
a $4.5 trillion deficit reduction package. One of the keystone
revenue boosters is a provision that would cap federal income tax
deductions at $50,000 per year for high-income Americans.
To be sure, Corker’s plan has plenty of meritorious items,
including gradually increasing the eligibility age for Medicare and
Social Security as well as changing the inflation measure used for
many cost-of-living increases to entitlements.
But capping at such a low level the deductibility of mortgage
interest and charitable contributions, just to name two big-ticket
deductions for the well-heeled, is a mistake that will have several
large unintended negative consequences.
First, the obvious: For universities, hospitals, and other
recipients of very large donations, this plan would instantly dry
up a major source of funding. The outcry from the non-profit
industry against this plan will be intense as it was the last time
Barack Obama tried to limit the deductibility of gifts to
non-profits.
Second, the value of expensive homes will drop as the effective
after-tax cost of mortgage payments on those homes skyrockets. For
those of you who won’t shed a tear when someone’s $3 million home
becomes worth only $2.25 million, just wait until your county soon
comes to raise your property tax and sales tax rates to make up for
that lost revenue, telling you “it’s for the children.”
Third, although this change would have very little impact on
people like Barack Obama or Joe Biden who are notoriously uncharitable,
the impact on Americans who do desire to give away more money will
be very large — in some cases larger than if deductions were left
uncapped and the tax rate were increased.
Imagine someone who earns $1,000,000, pays $50,000 a year in
mortgage interest, and gives away $100,000 to charity. If these
deductions were capped at $50,000, per Corker and friends, her tax
bill would be $35,000 higher than today. However, if the deductions
were not capped and the top two marginal income tax rates were
raised to the 36 percent and 39.6 percent levels that we saw under
Bill Clinton, this taxpayer’s federal income tax bill would rise by
$25,386 instead. She’d be almost $10,000 better off with the higher
rates. In short, Corker’s bill penalizes not just expensive homes
but major philanthropy as well.
Admittedly, this exemplar is not the ordinary person (in terms
of income), and certainly not an ordinary Democrat (in terms of
charitable impulse). And to be crystal clear, I am not arguing for
higher marginal tax rates (more on that in a moment.) Perhaps
Republicans feel that this is the best they’ll be able to do in
negotiations with a re-elected president and public opinion polls
that show some support for soaking the rich despite history
suggesting that such a strategy is doomed to failure.
In an interview on CNBC, Senator Johnny Isakson (R-GA)
obligingly offered that a means-tested cap on deductions “say at
$50,000 or $30,000…makes more political sense.” Leave it to the
GOP to negotiate with themselves, with Democrats smiling at their
good fortune and wondering “will these people never learn?”
In the meantime, Senator Dick
Durbin (IL), the second-ranking Democrat in the U.S. Senate,
says that Medicare should be given more “solvency” (Democrat-speak
for more of your money), that Social Security should not be part of
fiscal cliff discussions, and that upper bracket tax rates should
rise in addition to imposing caps on deductions.
Republicans should take a lesson in negotiation strategy. Instead,
they’re hitting the mat before the first punch is even thrown and
blaming Grover Norquist for putting them in the ring.
At the risk of awakening the “shoot the messenger” crowd, some
words of wisdom from New Jersey Governor Chris Christie, perhaps
the political corollary to Jon Gruden’s laudatory language on
Monday Night Football, bear repeating: “Real leaders don’t follow
polls. They change polls.”
Republicans are and have long been truly terrible at explaining
“conservative,” which is to say real-world, economics. Grover
Norquist is better than most. But if GOP members of Congress don’t
get better at this, and in a hurry, their poll-following fears will
cause them to sell the nation down the fiscal river in a much more
permanent way than even the Republican Congress during the George
W. Bush years did.
The
lessons are very basic:
- From Barack Obama’s former senior economic adviser, Christina
Romer:
“[T]ax increases are highly contractionary,” with “a large, rapid,
and highly statistically significant negative effect on output” and
“a large and highly significant rise in the unemployment
rate.” - From Nobel laureate Milton Friedman,
the most important economist in American history (and a heck of a
nice guy who always shredded liberal arguments with a smile on his
face): Tax hikes do not reduce the deficit because “in the long run
government will spend whatever the tax system will raise, plus as
much more as it can get away with.” - “Hauser’s
Law” suggests that changing tax rates has a minimal impact on
the percentage of national revenue confiscated from the people.
Raising rates, if it raises revenue at all, will bring in much less
than Keynesian “static” models predict — which is why Democrats
insist on using static models rather than realistic ones.
In short, no person who is actually focused on the economic
impact, rather than aiming to assuage liberal guilt or further an
anti-wealth ideology, would consider raising income taxes — and
this means total tax collections, not just tax rates. But then we
are facing a rabidly ideological president who wants to raise taxes
“for purposes of fairness” regardless of the economic impact.
Political reality may doom economic rationality, as happens more
often than not in Washington, D.C. But like the Hippocratic Oath
taken by physicians, our elected leaders — particularly those
Republicans who should know better — must aim first to do no
harm.
As for the fiscal cliff itself, the spending side, particularly
“sequestration,” is undoubtedly a meat-axe-instead-of-scalpel
approach. But when politicians have been unwilling or unable to cut
anything of substance for more than a decade, almost any cut is a
welcome one. And while the defense cuts are disproportionately –
perhaps even dangerously — large (because yet again Republicans
got snookered in negotiations with the White House), it is beyond
time that politicians in both parties, but especially the GOP,
realize that defense spending is not a
jobs program, much less an entitlement destined never to
decline in the districts of powerful members of Congress.
To put it another way: as politicians play
Thelma and Louise politics with our federal budget, it
is worth remembering that for many who saw that overrated film, the
sight of the two going over the cliff seemed a fitting, even
welcome, end to their destructive (of self and others)
behavior.
And for those Republicans who are worried about the both the
outcome of current negotiations as well as their reputation if they
break their no-net-tax-increase pledge, going off the cliff solves
both problems and puts the GOP back on a more level playing field
for determining what comes next. Perhaps it is the aggressive
therapy needed to treat the disease of metastasizing government.
Better to suffer the nausea of chemotherapy than to die of national
fiscal cancer hastened by complications of Potomac Fever.
The biggest risk of going off the fiscal cliff is not the
short-term damage to the economy but the risk that an ignorant
electorate, goaded by a leftist media, will respond by calling for
more and bigger government, blaming Republicans for economic
chemotherapy rather than worrying about the underlying disease. The
results of our recent election makes that outcome seem sadly
likely.
Republicans who would become, as Newt Gingrich described Bob
Dole, “the tax collector for the welfare state” will one day wish
that Grover Norquist’s ire was really the worst of their problems.
Unfortunately, the worst we can do to these Jello-spined ersatz
conservatives is not reelect them; the worst they can do to us is
bankrupt our children while furthering the Obama/Alinsky dream of
“fundamentally transforming” our nation. Sadly, some of them seem
hell-bent on doing just that.
In the meantime, in this world of Republican weakness, some of
us wonder from where will come the next Barry Goldwater, whose many
fundamentally American pronouncements include this:
I have little interest in streamlining government or in making
it more efficient, for I mean to reduce its size. I do not
undertake to promote welfare, for I propose to extend freedom. My
aim is not to pass laws, but to repeal them. It is not to
inaugurate new programs, but to cancel old ones that do violence to
the Constitution, or that have failed their purpose, or that impose
on the people an unwarranted financial burden. I will not attempt
to discover whether legislation is “needed” before I have first
determined whether it is constitutionally permissible. And if I
should later be attacked for neglecting my constituents’
“interests,” I shall reply that I was informed that their main
interest is liberty and that in that cause I am doing the very best
I can.
Few members of today’s Congress could summon up this level of
moral courage and fewer still the rhetoric with which to express it
– although this judgment may incorrectly presuppose that the
American people still hold dear the values of our Founding.
For those Republicans who fear a similar impact to their
political careers as Barry Goldwater suffered in 1964, I hope,
though without much optimism, that they will remind themselves of
the success of Ronald Reagan who knew how to make conservative
policy a political asset. As a wise friend put it,
“If chicken Republican pols
have learned nothing from their party’s history of the last
half-century they’re not likely to have much of history in the
coming half-century.“
It may well be that the political situation requires “putting
revenue on the table.” The source of that revenue should be
pro-growth tax reform which, as Cato Institute economist Dan
Mitchell has shown repeatedly, can be a panacea to our fiscal
ills if combined with restraining the growth of government.
But given the likelihood that Republicans will indeed cave in to
media-magnified pressure to make a deal, any deal, just for the
sake of a deal, they should at least negotiate real,
immediate, and substantial cuts to the cost and growth of
entitlement programs. The nation can no longer afford politicians
whose role model seems not to be Barry Goldwater but rather Wimpy,
of Popeye cartoon fame, who suckered his friends repeatedly with
the promise “I will gladly
pay you Tuesday for a hamburger today.”
If I may close with one last quote, this from the late columnist
Robert Novak: “God put the Republican Party
on earth to cut taxes. If they don’t do that, they have
no useful function.” Thank goodness we have Grover Norquist keeping
many Republican politicians focused on doing the right things. No
doubt his effectiveness in doing so — or embarrassing those who
stray — is precisely why Democrats and RINOs alike are demonizing
him daily.
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Short URL: http://unitedwingnut.com/?p=19217
Posted by The_Wingnut
on Nov 28 2012. Filed under The American Spectator.
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