…because I’m an economist and a mom–that’s why!

The “Pledge” Versus the “Position”

July 21st, 2011 . by economistmom

Exciting buzz about Grover Norquist’s admission that letting the Bush tax cuts expire would not technically violate the “No New Taxes” pledge (which surprised me)–followed by his quick walk-back on it (which didn’t surprise me).  I think Time magazine’s Michael Scherer has it right with his interpretation:

Grover’s admission that such a course would not violate the pledge is a big deal, and he is all over the place today trying to walk it back. But if you read his clarifications closely, he is not denying what he told the Washington Post. He is simply adding another fact: While such a course would not violate the pledge, he says, it would violate the position of Americans of Tax Reform. Here is Norquist today on MSNBC:

“There are certain things you can do technically and not violate the pledge, but that the general public would clearly understand as a tax increase. So I can be clear: Americans for Tax Reform would oppose any effort to weaken, reduce, or not continue the 2001, 2003 Bush tax cuts.”

So there is a huge difference between what the “No New Taxes” pledge literally says (that they can’t raise taxes with new legislation) versus the more aggressive version that’s what Grover and the other Republicans probably wish the pledge said (and in practice, how they have loosely interpreted the pledge): the “position” that revenues not go above those consistent with permanently extending and deficit-financing all of the Bush tax cuts.

It would thus be a true compromise on the GOP’s part if they were to agree to push the literal NNT pledge to its literal limits and agree to either:

  1. reform the tax system in a way that sticks to a strict version of PAYGO, where any portion of the Bush tax cuts that policymakers want to extend (such as some or all of the marginal tax rate structure) be offset by additional revenues (such as through broadening the tax base/reducing tax expenditures); OR
  2. let all of the Bush tax cuts expire as scheduled at the end of 2012.

In either case, the level of revenues achieved would be consistent with CBO’s current-law revenue baseline, which happens to be a level of revenues consistent with economically-sustainable deficits (for the next couple decades at least, while we need the time to get entitlement programs reformed), as well as a level of revenues that’s actually far higher than what any of the Democrats (in Congress or the White House) have been proposing.  It would be a “compromise” for both sides of the aisle regarding deficit reduction, but would (surprisingly) increase the revenue-side portion of the solution for both, and yet would (ironically) not require the GOP to (officially) violate their No New Taxes pledge.

And speaking of the Democrats’ role in all this, I completely agree with what Ezra Klein says here.

I keep dreaming.

8 Responses to “The “Pledge” Versus the “Position””

  1. comment number 1 by: centerist cynic

    Grover Norquist’s power over the Republican Party has always puzzled me. His absolute demands for no new taxes are childish at best. Right now they are threatening to drive the US off a cliff.

  2. comment number 2 by: AMTbuff

    The deficit battle is a proxy for the actual conflict, which is whether the government should be as large as its promised benefits, including Obamacare, or only as large as current levels of taxation will sustain. I am tired of kicking the can down the road a few years at a time.

    This question needs to be settled now. It’s folly to pretend that the bond market will give us as many years as we want to make up our minds. History will not look kindly on us if we squander this opportunity to rationalize our spending and taxation. In my opinion, even a complete win for the spenders, say imposing structural reforms that cap spending at 28% of GDP and taxes at a minimum of 27% of GDP, would be preferable to continuing to paper over 10% of GDP annual deficits. The bond market is going to kill us if we don’t show it a clear path to balance.

    What I still don’t understand is why progressives don’t take the mirror image position, admitting that even a complete win for the spending cutters would be preferable to risking a continuation of the status quo. Because that’s also true.

  3. comment number 3 by: Gipper

    This is how nuts Grover Norquist truly is. If Republicans agreed to Bowles-Simpson, it would lower long-term tax rates and revenue % of GDP compared to current law. However, that would violate the pledge for one fiscal year.

    Grover Norquist is such a moron that he doesn’t understand the notion of present value. Also, the Republicans are dummies if they don’t have the intellect to outflank Norquist on the right with this argument.

    Republicans can use the debt limit to extort spending cuts from Obama if they agree to Bowles-Simpson tax rate proposals. Obama would no longer appear reasonable if he vetoed such a proposal. He’d have to take it. And Republicans could get huge cuts in entitlements. Just raising the age to begin receiving Medicare and Social Security to 68 alone could be an enormous fiscal boon. Repeal PPACA while we’re at it and get even greater fiscal relief.

  4. comment number 4 by: Hugh Campbell

    Obama’s Fiscal Commission Blunder and ATR’s Deficit Shell Game

    A recent editorial by Americans for Tax Reform (ATR) in USA TODAY titled Opposing view: Just say no to higher taxes

    speaks volumes regarding the Obama administration’s misjudgment with the Fiscal Commission. Demands for the Commission arose from the 2008 book/movie I.O.U.S.A. highlighted: the Leadership, trade, savings and budget deficits; the first three being the most middle class relevant and root causes of the budget deficit, the tip of the iceberg. The ATR’s pledge signers (not permitted to negotiate in good faith) limit the focus only to spending, throwing middle class relevant deficits under the bus and allow ATR to be the Puppet Master of a deficit shell game.

  5. comment number 5 by: OhioBoy74

    Grover Norquist hates the federal government and has said that he wants to see it reduced to the size where he could drag it into the bathroom and drown it. It seems to me that if he wants minimal federal government, he should move to
    Somalia. Let’s take up a collection!

  6. comment number 6 by: ST Dog

    OB74, what’s wrong with a minimal federal government?
    That’s precisely the system that was set up in the US in 1787. It was a minimal system with most power and authority reserved to the States and local governments. It’s only been since the depression and FDR that the government really became the bloated entity it is today, invading and controlling more and more of our lives.

    In that respect I’m with Norquist. The Federal government (and many State governments) needs to be scaled back by massive amounts. Any and all government programs need to be re-evaluated for constitutionality, effectiveness, and efficiency.

  7. comment number 7 by: Arne

    ST Dog,

    We do not have the same agrarian economy we had 200+ years ago. Now “your” business depends on “me” being a healthy, well-educated consumer who can reach the business for its success. A minimal government will do an inadequate job of supplying those consumers and everyone will end up being poorer.

    (I suspect we would agree that too large a government also has problems without agreeing how large that is.)

  8. comment number 8 by: STDog

    Agrarian or not, a centralized, authoritarian government is not what was setup.

    I’m not saying get rid of the entire governemnt, but re-evaluate and try something else. Too often over the past 75-80 years the feds have been the first and only choice.

    Health Care is a prime example. Let the states try different methods and see what works best/better for a given state instead of making it a federal program, ala Medicare and Medicaid.

    Even when the feds were the correct choice at the time, many programs have out lived the case for federal involvement. For example the highway department. The interstate system was a good goal, and maybe the feds needed to lead that. But the states should have taken oven the responsibility by now, at least the majority of it.