Grover Norquist: ‘The goal is to reduce the size and scope of government spending, not to focus on the deficit’
Grover Norquist is the president of Americans for Tax Reform and one of the most influential conservative activists in the country. There has been a series of reports recently that he’s fighting to keep Republicans from striking a “grand bargain” on deficit reduction — even if the tax increases are only a small part of the package. We spoke this afternoon about whether deficits are as important as spending cuts, whether the budget can be balanced without tax increases and whether there’ll be a deal. The answers, in order, were no, wrong question and no. A lightly edited transcript of our conversation follows.
Ezra Klein: Let me start by making sure I have your position right: We can and should balance the budget without increasing any taxes from the current levels, and perhaps while cutting them further.
Grover Norquist: Yes and no. We should reduce total government spending as a percentage of the economy. The left wants to focus on the deficit so they can take us away from the focus on spending as a percentage of the economy. As long as we’re focused on spending, there are only two ways to do that: One is spend less, and Democrats have no solutions for that. Or we have pro-growth policies that make the economy grow so the dead-weight cost of government becomes a smaller percentage of the economy and therefore less expensive. A 20-pound weight on the back of a small horse is more damaging than a 20-pound weight on a very big horse.
EK: It’s fair enough to focus on cutting spending rather than reducing the deficit, but you seem to focus on something else entirely: lowering tax rates. The pledge you have candidates sign is that they won’t raise taxes, not that they won’t increase spending. So if spending is the issue, why not have a spending pledge?
GN: Twenty-five years ago, I created the Taxpayer Protection Pledge at the federal level. Then I brought it to the state and local level. About 97 percent of the Republicans in the House and 85 percent in the Senate have signed on, and the number of candidates who have taken the pledge is even higher. It’s become a party position. And you have to say no to taxes because if taxes are always an option, the other team will always look to raise taxes rather than cut spending. You need to take that away. But because of that success, conservative activists have asked me the same question you did: What about a spending pledge to go with the tax pledge? The tax pledge is necessary but not sufficient for limited government. My response is: Write it for me. No spending beyond X dollar amount? Does it account for inflation? Is it as a percentage of GDP?
If I could come up with an enforceable measure, I’d do it. We’ve stopped tax increases for 15 years with this pledge. It worked from the time Clinton raised taxes in 1993 to 16 days into Obama’s tenure in office, when he raised taxes on tobacco and broke his promise not to raise taxes on anyone making under $250,000 a year. There’s only one person in America who makes more than $250,000 a year and smokes and it’s him. But in general, the pledge was very successful. I would argue that the tax pledge is the spending pledge. If you take taxes off the table, there’s only one thing to talk about: spending restraint. The other piece to this puzzle is a structural one: the tea party movement. Prior to that movement, there wasn’t an organized political opponent who said, “Don’t spend too much or we’ll throw something heavy at you.” Before them, Republicans could say, “I’ll leave your faith alone and your taxes alone and your guns alone and let you home-school your kids,” and that was enough. We now have a group that moves its vote on spending.
That’s why we were able to take away earmarks: The problem there wasn’t just the cost of earmarks, but that the earmarks were used to bribe politicians to support bigger spending projects. The currency was “support my big, stupid piece of governnent spending, and I’ll give you a small, stupid piece of government spending.” We took away that currency. The dollar value of the earmarks were a small piece, but as a reform it is much more powerful. Earmarks are the broken windows of overspending. They convince people that no one is serious about cutting spending. The real reductions in spending are in reforms like that one. And now there’s a tea party to make reforms like that.
EK: You say that if you take taxes off the table, all that’s left is spending restraint. But the Cato Insitute’s William Niskanen and others who’ve looked at this say the actual relationship is the opposite: When you take tax increases off the table, it’s easier for politicians to spend because the spending is suddenly free. The Bush administration, for instance, passed huge tax cuts and then passed a huge expansion of Medicare, a ton of infrastructure investment, wars -- they just didn’t pay for it. They put it on the credit card. When you push these guys to cut taxes, it doesn’t seem to me that you put spending cuts on the table. It seems like you put debt on the table.
GN: And the modern Republican Party/tea party movement is reacting to just what you’ve described. The Republicans took over the House and Senate in 1994. In 1997, the appropriators took over and pushed out Gingrich. The appropriators became the second most powerful political party in the country. Now we’re tamping down on the Appropriations Committee -- we’re taking away their ability to bribe and threaten others with earmarks. That changed the dynamic of power. Now they’re having trouble getting people to serve on the Appropriations Committee. At Americans for Tax Reform, we’d go even further: We’ve been arguing they should be limited to six-year terms. There’s been a change in the culture in the modern Republican Party. They’re reasserting spending discipline.
We’ve had three examples in the United States. In 1982, Democrats said we’ll give you three dollars of spending cuts for every dollar of tax increases. They don’t come more determined to cut spending than Ronald Reagan, but his team got taken to the cleaners. Factoring in inflation, spending increased more quickly after that deal than was projected before that deal. In 1990, Democrats went to Bush and said you’re a cheaper date: You get two dollars in spending cuts for every dollar in tax increases. Again, spending went up faster than had been projected. Then you had the no-deal. Clinton is president for two years with a Democratic House and Senate. Stock market is flat. Employment is flat. Economy is flat. Republicans take the House and Senate in 1994 and everything begins shooting straight up because Republicans say we won’t let Clinton do any of the things he wanted to do, and we’re cutting the capital gains tax.
EK: Just so I have this right: You’re arguing that the boom in the mid-1990s wasn’t because of the Internet or because we were snapping back from a recession, but because the election of a Republican Congress had a major confidence effect.
GN: Yes. You knew Republicans would cut the capital gains tax and wouldn’t do the list of things Clinton had planned. Similarly, the economy is strengthening now because all the things Obama was going to do aren’t going to happen. You know, there’s an investment fund that goes into the S&P 500 when Congress is in session and into cash when Congress is out of session. They’ve got a study showing the market rises more rapidly when Congress is out of session. It’s 17 times more rapid.
EK: As a market-oriented guy, don’t you think that if it was that easy to beat the market, every investor in the country would be using that strategy?
GN: Well, they just started it and the fund is doing well. It has outperformed the market for the last three years.
EK: When I look at the tea party and the Republicans right now, I see a very large tax deal -- $850 billion onto the deficit over two years. Some specific cuts this year, and talk of more cuts in the years to come. But I also see that they just won an election attacking the Democrats for cutting Medicare and relying heavily on the votes of seniors, so I’m skeptical that they’re going to be able to do much on entitlements. And although I believe we can cut the rate of growth in Medicare and Medicaid and Social Security, I don’t know anyone who really thinks we can bring their total spending down from current levels -- and yet tax revenues are insufficient at current levels. So how can you do this without tax increases at all?
GN: My concern is, step one, don’t raise taxes, and then let’s argue about spending. And on spending, there are both the actual cuts and reforms that lead to cuts. We’ve seen the numbers that come out comparing compensation in the private sector and public sector. Private sector, $61,000. State and local is $80,000. And federal is $123,000. If you went to compensation equity, you’d save $136 billion.
EK: Let me stop you there. I think I know the numbers you’re talking about, and those don’t adjust for industry. The average federal worker and the average private-sector worker do different jobs, have different levels of experience and education, etc. When you take all that into account, I’ve seen studies suggesting public workers are somewhat underpaid or somewhat overpaid, but the difference isn’t anywhere near $60,000 annually. And you can’t pay a lawyer at the Securities and Exchange Commission what you’d pay a retail worker in the private sector. You have to adjust for that stuff.
GN: But let’s just go through the numbers. We’re talking at the state and local level? The overpayments beyond what pay equity would be are $332 billion at the state level. If state and local governments have flexibility to remake contracts, if we liberalized labor law, then when the state turned around and said we’re giving you a billion dollars less next year, they can make the changes necessary. The cost of occupying Afghanistan next year is $119 billion and Iraq is $50 billion. Now, will you leave Afghanistan next week? No. But the number can be less than $119 billion. The overpayments of the federal workforce for non-postal, civilian workers are $136 billion a year. Let’s say you only get half of that. It’s not a small number. In D.C., we’re paying $15,000 per year for students, and they leave if given a $3,000 voucher. These are reforms that we ought to be doing and spending restraint that we ought to be focused on that you’d never get to if tax increases remained on the table.
What I’m focused on there is total spending as a percent of GDP, which is not affected by his tax increases, except insofar as they slowed the rate of economic growth. There are two bills we’ve argued Obama could sign with a smile on his face that would help the economy. One is expensing, which Obama put into the tax deal. He did that one. The second is repatriation. There’s something like a trillion plus dollars overseas, earned by American companies. Bush did this in 2005. He said corporations could bring back their income and he’d tax it at 5 percent rather than 35 percent and got $300 billion beyond what he expected back. But he foolishly did it the year after he got reelected. Obama could more cleverly do it this year.
EK: But these spending cuts seem illusory. I don’t think there’s much Republican support for radically changing the timeline in Afghanistan or Iraq, I don’t think the pay equity numbers really add up, vouchers are difficult policy that won’t pass right now, you sort of skipped Medicare and Social Security and Medicaid in there -- why do the spending cuts always come second? The tax cuts are real and passed while the spending cuts are theoretical. And that just sounds to me like debt.
GN: We’re fighting for all of these spending reductions -- we meaning the broad center right. You can go read our letters and statements. Some tax cuts create more economic growth than they cost. If we took our corporate income tax from 35 percent to 15 percent, you’d get more money, we’d be more competitive in the world, and we’d grow faster. Same thing with repatriation. And as a country, we spend too much money writing fancy wills and buying life insurance to get around the death tax. Getting rid of that would be better for growth. But not every tax cut pays for itself in growth. Cutting certain sales taxes may be a good idea, but it’s not necessarily sufficiently pro-growth to swamp the revenue losses on the static model of revenue reductions.
But you look at what we can accomplish. There’s also where you want to go. That’s the last two chapters of my book “Leave Us Alone,” which can also be found in Paul Ryan’s Roadmap. He wasn’t copying me. I was reading his mind. But that whole thing of block granting many government programs and turning Social Security and Medicare into defined-contribution plans is the only way to fix the problem long term. How do we get from here to there? We’ve made some progress. We will have a Republican House in two years, and I think we’ll have a 50-50 shot at a 60-vote majority in the Senate after the 2012 and 2014 elections. Then you have a chance to make some real reforms.
EK: When it comes to the new Gang of Six -- the negotiations between Sens. Tom Coburn and Saxby Chambliss and Mike Crapo for the Republicans, and Mark Warner and Dick Durbin and Kent Conrad for the Democrats -- let’s say they really get the fiscal commission’s package on the table. About 70 percent spending cuts, 30 percent tax increases. Balanced budget fairly soon. Do you fight that deal because any tax increase is too much of a tax increase? Or is balancing the budget and making these other reforms, if they’re on the table, worth accepting?
GN: The goal is to reduce the size and scope of government spending, not to focus on the deficit. The deficit is the symptom of the disease. And there are several reasons to oppose tax increases. First, every dollar of tax increase is a dollar you didn’t get in spending restraint. Two, if you walk into the Democrats’ Andrews-Air-Force-Base, Lucy-with-the-Football trick for the third time in a row -- they don’t have have a saying for being fooled three times!
In ’82 and ’90, the Republicans were smart, tough focused guys. They were taken to the cleaners. The Republicans negotiating with the Democrats are negotiating with Dick Durbin. Durbin. Durbin! Does Durbin have an interest in cutting any government program in the history of the world at any time in his life? No. Never. He’s there to sucker Republicans into putting their fingerprints on a tax increase so when you go into an election, people say, “Can’t trust them. They’ll raise taxes.”
The reason it won’t happen is that the Republicans have taken the pledge and made a promise to their constituents that they won’t increases taxes. And I’ve talked to the guys in the House and Senate. They tell me it won’t happen. And even Coburn, Chambliss and Crapo wrote a letter to me that said, “If and when there is a legislative proposal to be presented to the American people, we look forward to again working with you and all interested parties to support a proposal where any increase in revenue generation will be a result of the pro-growth effects of lower individual and corporate taxes.” So the three guys who I worry -- because of some of the press statements -- might be cajoled or tricked into putting the fingerprints on a tax increase have said in writing that they won’t do a tax increase. Right now, in our public pronouncements, we are completely in sync. I agree with their statement; they have signed the pledge.
Every once in awhile, some reporter ekes out a comment from one of them saying everything is on the table, but when they talk to me, they say we’ll talk about anything, but we won’t agree on a tax increase. My position is: Why go into a room and close a door with people who have the history that Conrad and Durbin do? But no, there won’t be a tax increase. That’s not happening. It’s an odd way to spend your time. I think golf and cocaine would more constructive ways to spend one’s free time time than negotiating with Democrats on spending restraint.
| March 9, 2011; 5:26 PM ET
Categories: Budget, Interviews
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