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| Grover Norquist |
WASH. POST:
Three big-name Republicans
broke with Grover Norquist over the holiday weekend, saying they won’t be bound by their Norquist-sponsored pledges to oppose any and all tax increases.
The moves by Sens. Lindsey Graham (S.C.) and Saxby Chambliss (Ga.) and Rep. Peter King (N.Y.) represent the opening steps of a delicate dance for the GOP — and one that could come to define the just-begun talks over the looming “fiscal cliff.” The question from here is whether this represents a simple trial balloon or the beginning of a movement in which a large segment of the GOP embraces a tax increase as an unhappy reality.
If that were to occur, it would both mark a significant shift in party orthodoxy and also threaten to make the tea party primaries of 2010 and 2012 seem tame.Twenty years ago, George H.W. Bush saw his approval ratings plummet and Republicans lost seats in Congress in the 1990 midterms after Bush went back on his anti-tax pledge (“Read my lips: No new taxes”). By the end of 1992, Bush had lost reelection.
Today, congressional Republicans have their own pledge and are inching toward breaching it, despite knowing very well that they could pay an electoral price.Republicans in Congress have seen a procession of conservative and tea party candidates upset more moderate establishment candidates (including incumbents) in primaries in recent years. And many of them lost in large part because of one vote — for the 2008 Troubled Asset Relief Program (TARP) bailout.
If you don’t think Republican incumbents fear for their political lives by voting for a tax increase, you don’t know members of Congress. Even as the vast majority of Republicans who supported TARP didn’t face tough primaries in recent years and only a handful lost, the fate of the ones who did will be on the mind of anybody who votes for a tax increase — as will Bush’s demise.
“‘Read my lips’ is still an iconic phrase for breaking your word on taxes,” said GOP strategist Dan Hazelwood. “I suspect it will be widely quoted in 2013-14.”Despite that very real threat, Republicans have been hinting for a while now that they may accept some revenue increases — whether through tax hikes or closing tax loopholes — to avoid
the drastic cuts that would be triggered by sequestration.
Whether Republicans vote for tax increases or closing loopholes, if those changes aren’t offset by other tax cuts, the package will be in violation of Norquist’s Americans for Tax Reform pledge.
Norquist, for his part, doesn’t see the GOP deserting his pledge en masse. He noted that Graham has made similar comments before and only said he would abandon the pledge if it was accompanied by big entitlement reforms, which Democrats will be hard-pressed to embrace.
“I don’t think between now and 2014 that either the South Carolina senator or the Georgia senator will vote for a tax increase,” Norquist predicted in an interview with The Fix. “I am pleased at how the modern Republican Party and the members of Congress are hanging together in opposition to being TARPed again.”
What seems to be missing so far is a big public threat from the tea party and groups like Norquist’s to support primary challenges against any member who votes for a tax increase. So far, Norquist and conservative groups haven’t been willing to go there.
Most Republican strategists suggest the Norquists of the world and the tea party groups might be able to stomach a deal that includes tax increases, as long as the rest of the deal is seen as a good one — that is, that it contains real spending cuts and other conservative-friendly reforms.
“Conservatives have seen this movie before where we buy into higher taxes in return for spending cuts, only to have the cuts never materialize and find ourselves years later dealing with higher deficits and debt,” said one GOP strategist, granted anonymity to discuss strategy. “I can’t see us allowing Lucy to pull the football again.”
For the Republican Party, though, it will be very difficult to sell its anti-tax base on even a good deal that includes tax increases.This is a Republican Party, after all, whose presidential candidates all stood on a debate stage last year and said that
they would reject a deal that includes $10 in spending cuts for every $1 in tax increases.
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Obama Looks for Support on Taxes
Now if only the 99 percent would show up. White House aides are scrambling to animate Obama voters as the president prepares to square off with congressional Republicans over tax increases for the wealthiest Americans. Supporters are being asked to record YouTube videos of themselves arguing for tax hikes on the most well-off of the well-to-do, and emails explaining the president’s position were sent to activists in the past week. It’s all an attempt to kick the Obama campaign machine into gear—a strategy that mostly did not carry through in the president’s first term.
November 26, 2012 6:33 AM
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HUFFINGTON POST Robert Kuttner Co-founder and co-editor, 'The American Prospect'
The Fiscal Myth
As President Obama gets closer to making his deal with the Republicans on the budget, the most important thing to keep in mind is that the fiscal cliff is an artificially contrived trap. Were it not for the two Bush wars and the two Bush tax cuts and the House Republican games of brinksmanship with the routine extension of the debt ceiling, there would be no "fiscal cliff." Rather, there would be a normal, relatively short-term increase in the deficit resulting from a deep recession and the drop in government revenues that it produces. When the economy recovered, the deficit would return to sustainable levels. In the meantime, these deficits are necessary and useful to maintain public spending as a tonic to the economy.
Read Post
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NY TIMES P
AUL KRUGMAN November 25, 2012
These are difficult times for the deficit scolds who have dominated policy discussion for almost three years. One could almost feel sorry for them, if it weren’t for their role in diverting attention from the ongoing problem of inadequate recovery, and thereby helping to perpetuate catastrophically high unemployment.
What has changed? For one thing, the crisis they predicted keeps not happening. Far from fleeing U.S. debt, investors have continued to pile in, driving
interest rates to historical lows. Beyond that, suddenly the clear and present danger to the American economy isn’t that we’ll fail to reduce the deficit enough; it is, instead, that we’ll reduce the deficit too much. For that’s what the “fiscal cliff” — better described as the austerity bomb — is all about: the tax hikes and spending cuts scheduled to kick in at the end of this year are precisely not what we want to see happen in a still-depressed economy.
Given these realities, the deficit-scold movement has lost some of its clout. That movement, by the way, is a hydra-headed beast, comprising many organizations that turn out, on inspection, to be financed and run by more or less the same people; dig down into many of these groups’ back stories and you will, in particular, find Peter Peterson, the private-equity billionaire, playing a key role.
But the deficit scolds aren’t giving up. Now yet another organization,
Fix the Debt, is campaigning for cuts to Social Security and Medicare, even while making lower tax rates a “core principle.” That last part makes no sense in terms of the group’s ostensible mission, but makes perfect sense if you look at the array of big corporations, from
Goldman Sachs to the UnitedHealth Group, that are involved in the effort and would benefit from tax cuts. Hey, sacrifice is for the little people.
So should we take this latest push seriously? No — and not just because these people, aside from exhibiting a lot of hypocrisy, have been wrong about everything so far. The truth is that at a fundamental level the crisis story they’re trying to sell doesn’t make sense.
You’ve heard the story many times: Supposedly, any day now investors will lose faith in America’s ability to come to grips with its budget failures. When they do, there will be a run on Treasury bonds, interest rates will spike, and the U.S. economy will plunge back into recession.This sounds plausible to many people, because it’s roughly speaking what happened to Greece. But we’re not Greece, and it’s almost impossible to see how this could actually happen to a country in our situation.
For we have our own currency — and almost all of our debt, both private and public, is denominated in dollars. So our government, unlike the Greek government, literally can’t run out of money. After all, it can print the stuff. So there’s almost no risk that America will default on its debt — I’d say no risk at all if it weren’t for the possibility that Republicans would once again try to hold the nation hostage over the debt ceiling.
But if the U.S. government prints money to pay its bills, won’t that lead to inflation? No, not if the economy is still depressed. Now, it’s true that investors might start to expect higher inflation some years down the road. They might also push down the value of the dollar. Both of these things, however, would actually help rather than hurt the U.S. economy right now: expected inflation would discourage corporations and families from sitting on cash, while a weaker dollar would make our exports more competitive.
Still, haven’t crises like the one envisioned by deficit scolds happened in the past? Actually, no. As far as I can tell, every example supposedly illustrating the dangers of debt involves either a country that, like Greece today, lacked its own currency, or a country that, like Asian economies in the 1990s, had large debts in foreign currencies. Countries with large debts in their own currency, like
France after World War I, have sometimes experienced big loss-of-confidence drops in the value of their currency — but nothing like the debt-induced recession we’re being told to fear.
So let’s step back for a minute, and consider what’s going on here. For years, deficit scolds have held Washington in thrall with warnings of an imminent debt crisis, even though investors, who continue to buy U.S. bonds, clearly believe that such a crisis won’t happen; economic analysis says that such a crisis can’t happen; and the historical record shows no examples bearing any resemblance to our current situation in which such a crisis actually did happen.
If you ask me, it’s time for Washington to stop worrying about this phantom menace — and to stop listening to the people who have been peddling this scare story in an attempt to get their way.