Fiscal Match of the Century: Coburn vs. Norquist

Fiscal Match of the Century: Coburn vs. Norquist

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There is an important behind the scenes debate going on among Republicans today on whether they really care about the budget deficit and tax reform, or whether they are just posturing. So far, the posturing faction is winning. But there may be hope.

Among the very few Republican members of Congress who is genuinely concerned about the deficit is Sen. Tom Coburn of Oklahoma. He understands the simple fact that the deficit is the difference between revenues and outlays. Therefore, the deficit may be increased by tax cuts and reduced by higher revenues.

Like the rest of his party, Coburn strongly supports spending cuts to deal with the deficit to the greatest extent possible. But at the end of the day, he understands that higher revenues will have to play a role. This has made Coburn a powerful enemy of Grover Norquist, president of Americans for Tax Reform (ATR).

On February 17, The Wall Street Journal reported that Coburn was among the members of a small bipartisan group of senators who are willing to consider taxes as part of a deficit reduction package. Norquist immediately went after the three Republicans named in the article: Coburn, Saxby Chambliss of Georgia, and Mike Crapo of Idaho. (The Democrats are Kent Conrad of North Dakota, Richard Durbin of Illinois, and Mark Warner of Virginia.)

The same day the Journal article appeared, Norquist fired off a letter to Chambliss, Coburn and Crapo, threatening them with retaliation for their apostasy:

I was disappointed this morning to read an article … in which you were implicated as parties to a bipartisan budget deal containing a net tax increase…. Needless to say, support for such a deal would most likely be a violation of your Taxpayer Protection Pledge. That pledge which you made to your constituents and the American people obligates you to “…oppose any net reduction or elimination of deductions and credits, unless matched dollar-for-dollar by further reducing tax rates.”

I urge you to reject this so-called “deal” which is little more than a transparent attempt to hike taxes and put off the spending restraint the country clearly called for in the 2010 elections.

Chambliss, Coburn and Crapo immediately wrote back to Norquist, rejecting his threat and the logic of his argument. They said there is a huge difference between a legislated tax increase and the natural rise in revenue that would accompany faster growth resulting from tax reform.

Unfortunately, Norquist has also effectively barred the tax reform door by insisting that every provision of the tax code that lowers revenues must be preserved lest it violate the tax pledge that virtually every Republican in Congress has signed. Toward this end, his organization has repeatedly insisted that explicitly temporary tax cuts must be extended forever. Last year, for example, ATR claimed that allowing the Bush tax cuts to expire on schedule, exactly as Republicans wrote the law, would constitute the “largest tax hike in history.” Failure to support extension of the tax cuts would be deemed a violation of the pledge.

ATR even insisted that all the gimmicky business provisions, known as “extenders” because they were supposed to expire years ago, must also be renewed even though they “are horrible tax policy” in its own words. The stated rationale is that taxes must be prevented from going up on anyone, and that it is impossible for any tax cut to be considered an earmark no matter how narrowly focused the benefits.

Even though ATR claims to support comprehensive tax reform along the lines of the Tax Reform Act of 1986, in practice it has made it impossible for there to be any serious discussion of this topic. That is because a revenue-neutral tax reform, which broadens the tax base and lowers tax rates as the 1986 act did, will necessarily raise taxes for some people and businesses while lowering them for others. But ATR always treats the reforming provisions that would broaden the tax base as an impermissible violation of the tax pledge.

Sen. Coburn has expressed deep frustration with the de facto ATR position that every revenue-reducing provision of the tax code is off-limits and that the only thing that may be discussed is further tax cuts. On March 22, Coburn’s spokesman told The Hill that Coburn “strongly disagrees with ATR’s belief that every distortion and corporate welfare subsidy in the tax code, such as that for ethanol, is a ‘tax cut’ that needs to be preserved.”

Occasionally, Norquist is backed into a corner and forced to admit that he doesn’t really care about the deficit. He told the Washington Post’s Ezra Klein on March 9, “The goal is to reduce the size and scope of government spending, not to focus on the deficit.”

When asked to explain how the size and scope of government is reduced by the tax pledge, Norquist fell back on a discredited doctrine called “starve the beast,” which says that tax cuts somehow or other automatically reduce spending and that the only thing to talk about is spending.

Ronald Reagan often supported
large tax increases both as
governor of California and as president.

To my knowledge, Norquist has never addressed the obvious fact that spending as a share of GDP fell sharply after Bill Clinton raised taxes in 1993 or that spending rose sharply as a share of GDP after George W. Bush cut taxes in 2001, 2002, 2003, 2004 and 2005. By Norquist’s logic, spending should have risen under Clinton and fallen under Bush.

In his interview with Klein, Norquist tried to argue that Republicans deserve all the credit for spending restraint under Clinton because they took control of Congress in 1994. But the truth is that the budget restraints enacted as part of the 1990 and 1993 budget deals deserve almost all of the credit, especially PAYGO, which required that new spending be offset with spending cuts or tax increases. Yet ATR adamantly opposed reinstatement of PAYGO.

The idea that deficits don’t matter, that only spending matters, and that one can’t be a Republican and support even the most innocuous tax increase is a recent historical development. Ronald Reagan often supported large tax increases both as governor of California and as president. By the end of his presidency, he signed into law legislation that raised revenues by $133 billion ($370 billion today).

Nor is the idea that the American people oppose tax increases as politically popular as Republicans seem to believe. The latest ABC News/Washington Post poll found that 64 percent of people favor tax increases as part of a deficit reduction deal. And 71 percent think Republicans have not done enough to reduce the deficit by refusing to compromise.

The opposition of one Republican organization to any form of tax increase no matter how big the deficit gets wouldn’t matter much if it weren’t for the Tea Party, which takes its marching orders on taxes from Norquist. And there is not a single Republican in Congress who isn’t frightened to death of a Tea Party challenger in the Republican primary next year. They know from the experience in 2010 that no incumbent Republican is safe, no matter how conservative their voting record, if they don’t kowtow sufficiently to the Tea Party. They also know that Tea Partiers would rather lose a seat to the Democrats than make the tiniest concession to their ideological dogma on hot-button issues such as health or taxes.

This reality has effectively given Norquist veto-power within the GOP on all tax issues. Like an ancient Roman emperor turning thumbs-up or thumbs-down in deciding whether a gladiator would live or die, he alone decides what is a violation of the tax pledge and what isn’t. And woe be to the Republican who gets Norquist’s thumbs-down because he or she is likely to suffer political death at the hands of the Tea Party.

This is why Sen. Coburn’s challenge to the Norquist/Tea Party orthodoxy is so important. As someone whose record of fiscal conservatism is unquestionable, he has the stature to stand up to them and not be intimidated. Our nation’s fiscal future may depend on whether he is successful or not.

Related Links:
Congress May Resurrect Tough Medicine Deficit Plan (The Fiscal Times)
Promise on Taxes Sparks GOP Rift (The Wall Street Journal)
Conservative Fight Brewing?  Grover Norquist Versus Tom Coburn (Politics Daily)