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Posted at 3:18 PM ET, 03/10/2011

How Grover Norquist makes the case for tax increases

By Ezra Klein

In our interview yesterday, Grover Norquist argued that Republicans shouldn’t strike deficit deals with Democrats because the spending cuts never stick but the tax increases always do. I don’t really buy it, but looking at Naftali Bendavid’s description of the deal being developed in the Senate makes me a bit more sympathetic: “The package under consideration would essentially force Congress, within a short period of time, to come up with changes to spending and tax rules to achieve that goal over the next decade.”

Most of the savings envisioned by the Fiscal Commission were of the “government must figure out how to save some money” variety. They named a spending target and told Congress to reach it. That’s a popular strategy for spending cuts: Both House Republicans and the administration are talking about long-term freezes on non-defense discretionary spending without giving specifics for where those cuts will be made in years two, three, four and five. If you look at Paul Ryan’s Roadmap — a model Norquist said he supports — the idea is to cap how much money Medicare beneficiaries get and hope the system will somehow make do with radically less. The Affordable Care Act also has some spending caps, notably in Medicare’s productivity payments. The deficit-reduction plan released by Norquist’s Americans for Tax Reform took the same approach: A 10-year spending freeze across various sectors of government with few specifics on how to implement it. If any or all of these policies passed next year, it’s still pretty easy to imagine future congresses exceeding the limits set in 2012.

Of course, I’d take a different conclusion from that then the one Norquist does: Radically reducing spending is hard. The stuff that’s easy to cut, like earmarks, doesn’t amount to much. There’s just not that much obviously wasteful or unnecessary spending — particularly when you realize that the word “spending” really means “medical procedures, Social Security checks and military costs.” But if you don’t believe that having Congress promise that future congresses will figure out how to cut spending will work — and it’s clear that Norquist, for one, doesn’t trust that strategy — then that makes tax increases more necessary for balancing the budget, not less. Norquist gets around that because his stated goal isn’t to balance the budget, but since fairly few politicians or policy wonks are willing to admit they don’t care about deficits, that excuse doesn’t work for very many participants in this debate.

By Ezra Klein  | March 10, 2011; 3:18 PM ET
Categories:  Congress, Democrats, Economy, Republicans  
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Comments

Dude -- please think at least one move ahead! Raising taxes might balance the budget in the short term, but what are the odds the government will stay within whatever their new spending power is?

ZERO!

The fact is, we-the-people have a certain tolerance for budget deficits, and so apparently we're going to get them -- at least until something structural changes.

A budget surplus is when the money comes in so fast, even the government can't spend it all. (I forget who said that -- sounds like a Milton Friedman quote) -- but whoever said it is right.

Raising taxes in the context of a true constitutional spending cap might be the compromise that eventually works -- but I fear the government will have to pull a Greece before it gets that.

Posted by: MadisonLives | March 10, 2011 3:31 PM | Report abuse

Madison is right! Look what happened when Clinton raised the marginal rate on the richest by a monstrous 3% --- total hellscape of deficits and destruction!

Better to just give the rich an ever-increasing percentage of the national wealth. Just make sure the rest of us have access to Fox News, and it is all good!

Posted by: AZProgressive | March 10, 2011 3:40 PM | Report abuse

If we really cared about the deficit, we would raise taxes to the point where we're shouldering all the spending. Once we're all feeling that, maybe then there will be incentive enough to see who is hurting bad and what programs we need to look at eliminating. Making almost random cuts in programs without serious deliberation is like cutting off our arms in order to lose weight for beach season.

Running a deficit, after all, is cheating, if we want to get serious about it, that is. But taking raising revenues off the table to address this is childish. If people are afraid that taxes will remain higher, I invite you to look at how easily cuts passed in 2001.

Posted by: arm3 | March 10, 2011 3:52 PM | Report abuse

@AZProgressive:

I am as left wing as they come, but the Clinton year finances were as much a result of the dotCom boom as they were political fiscal policy of divided government.

We don't need to make barely plausible connections to make our arguments.

Posted by: rpixley220 | March 10, 2011 3:53 PM | Report abuse

When you say that Norquist doesn't care about balancing budgets, you should say why. He wants eventually to de-fund the government, or as he once put it, "drown the baby." That is such a libertarian verging on nihilistic - crazy - agenda that it makes everything he says important to interpret through that lens. The fact that others pay attention to him doesn't mean you have to take him seriously intellectually, because he fundamentally is not intellectually serious, though politically he certainly is. Thus, it's much like dealing with Hamas - you must recognize that they are irredentists - their goal is end the state of Israel and it informs everything they do. His goal is to end the government and he is not a constructive contributor to serious debate.

Posted by: fastbulbous | March 10, 2011 3:55 PM | Report abuse

@arm3:
The problem with raising taxes to the point of shouldering all the spending is a fallacy. The reason is that doing so would cause the economy to go into a tailspin. Which would reduce the government revenues, would would then necessitate more taxes to cover the spending, lather rinse repeast.
.
"Running a deficit, after all, is cheating".
.
No it's not. Doing so for no reason is dumb. Running a deficit to soften a recession is what gov't *should* do. The reason is the above. If we cut back, then the economy suffers greater reductions. Deficit spending keeps the economy moving along at a higher overall rate and hopefully gains in the future payback those outlays. Short term smaller pain over longer periods instead of a very large very painful depression that isn't guaranteed to be shorter anyway.
.
It's all about planning and deciding what helps the most long term vs short term.
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Neither side of the political fence has been very good at any of it unfortunately.
.
Cutting taxes can help if people and business are in a mood to spend; that was decided *not* the case going into there recession. People and business *stopped* spending and the economy tanked. The Stimulus helped some but was called too small at the time. We know now that was correct. It needed to be a bigger investment in the future but the GOP nixed that.

Posted by: rpixley220 | March 10, 2011 4:03 PM | Report abuse

oh, and the fund that Norquist was talking about is not doing all that great - certainly not beating the S&P by a factor of 17. In fact, as of today it lagged or is just even with the S&P in its period since inception - as far as I can tell anyway - which is pretty amazing since they appear to have started the fund in August 2008, just before the S&P lost 30%+ of its value. Holding cash in late 2008-09 is a gimme, I must say. Even so, Mr. Norquist's theory makes no real sense as prescriptive policy making, unless one is advocating a government that does nothing to affect markets, ever - oh, wait a minute...

Posted by: fastbulbous | March 10, 2011 4:16 PM | Report abuse

At least Norquist is honest about deficits. He is honest about little else. His prescriptions and the folks how follow them have little to do with our fiscal reality. His goal seems to be to run up our structural debt to the point that it triggers a fiscal crisis. The results will be ugly if and when that happens.

Posted by: smoot2 | March 10, 2011 4:38 PM | Report abuse

rpixley220, I agree with you completely; I probably should have put serious in quotes.

I do think keeping taxes off the table though is childish and insincere. They should just own the fact that they don't want to provide heat in winter for the elderly, funds for early childhood education, or try to keep the food supply safe.

Rather, they like the status quo, they like where the money is now, and are merely seeking to keep it there with measures such as eliminating taxation on inter-generational wealth transfers. In this way, the winners win forever, so they don't need to keep educating the population, or care about them in particular. They can just spend all their time marveling at their own tiger blood and Adonis DNA. Winning, duh.

Posted by: arm3 | March 10, 2011 5:04 PM | Report abuse

Norquist operates from a false premise - that the federal government's activities are a drag on the economy. That isn't the case for two reasons.

The first: Look at the wealth drivers in the United States today. With the sole exception of the entertainment industry, they all started with government-sponsored research and investment. (One example among dozens I can list personally: Where do you think your GPS came from?)

The notion that the private sector funds major amounts of R&D, and especially the notion that private-sector R&D is particularly effective, is merely an assertion - I've never seen any evidence to support it.

The second: When the government redistributes wealth from the richest households to the poorest, that money creates demand throughout the economy. And supply-siders notwithstanding, demand is what creates jobs.

Posted by: RobertDLewis | March 10, 2011 6:26 PM | Report abuse

My wife and I earned about $80,000 in salary and bonuses last year, and about another $25,000 in untaxed benefits (health care, 401k, etc). We paid $5300 in federal income tax, using nothing but the standard deductions and a deduction of a couple hundred dollars of student loan interest.

The idea that we are "over-taxed" is patently absurd.

Posted by: brickcha | March 10, 2011 10:33 PM | Report abuse

My mantra will remain the same until adults get in the conversation. One has to pay their bills. You should not get or expect to get what you are not willing to pay for. Norquist has never played with a full deck; his goal is just anti-tax - no matter if it makes sense or not. That is his stance and he also should expect to receive nothing if he wants to pay nothing. No one wants to pay taxes, but our solution is to give more to the wealthy when "trickle-down" has never worked. One denigrates unions, but hate to say it folks, they were needed at one time to help out those who weren't rich and didn't have a leg to stand on. The original tax cuts (and their extension now) are part of reason for the mess we are in. It isn't just due to collective bargaining and government employees. We are only "over-taxed" if we don't want what taxes pay for. The huge deficits suggest we are either under-taxed or just want freebies that we don't want to pay for. You pay for what you get and what you want. That doesn't mean free lunches for any segment of the population.

Posted by: dan47AL | March 11, 2011 10:48 AM | Report abuse

All this is quite interesting.

BTW, what happened to the GOPer mantra of "Jobs Jobs Jobs".

Wouldn't some program designed to help create jobs also cut the deficit?
Where is the legislation on THAT?

Oh..
wait...

The GOP programs is about CUTTING Jobs jobs jobs.

Funny that no one actually ASKED them.

Posted by: grat_is | March 11, 2011 11:31 AM | Report abuse

RobertDLewis: You are so right!! I get so tired of Conservatives saying the Government doesn't create jobs. Every person with a job because of the internet has a job because of government spending. All the jobs created manufacturing, shipping, selling, and delivering memory foam mattresses are there because of government spending. Most of the industries we have today are here because of initial government spending.

Posted by: Repub | March 11, 2011 6:48 PM | Report abuse

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