On the surface, it would seem like an opportune time for Congress to include targeted tax hikes as part of a cost-cutting package to reduce the huge federal deficit.
Federal taxes, as a share of the overall economy, are at their lowest levels since 1950. A return to the higher income tax rates of the Clinton presidency — when many Americans prospered, and calls for tax cuts were fairly muted — would wipe out most of the deficit. And congressional Democrats appear ready to make deep spending cuts, sought by Republicans, in exchange for a smaller level of tax increases.
Despite all that, most congressional Republicans have vowed not to raise taxes of any kind, complicating efforts to reach a bipartisan deal to reduce spending and prevent the United States from defaulting on its loans.
The adamant stand puzzles many analysts. They say it’s almost self-defeating, blocking Republicans from accepting deals in which Democrats have made the biggest concessions.
“Republicans don’t know when to take ‘yes’ for an answer,” said Bob Bixby of the bipartisan Concord Coalition, a leading advocate of balanced budgets. “They could have very, very favorable terms” in the current negotiations, he said, with Democrats yielding far more in spending cuts than Republicans would have to yield in tax hikes.
The potency of the Republican Party’s anti-tax stance seems to have caught even a top GOP lawmaker, House Speaker John Boehner of Ohio, by surprise. He had to back away from suggestions that he might accept significant revenue hikes as part of a $4 trillion deficit-reduction plan.
“There was never any agreement to allow tax rates to go up in any discussions I’ve ever had with the White House,” Boehner said Monday.
Key Republicans and others cite at least four key events that transformed the GOP from a party with a balanced approach to taxes and spending — Richard Nixon and Ronald Reagan both raised taxes, though many Republicans now ignore those facts — to a party that puts a no-net-tax-increase pledge above almost everything else.
—Read My Lips.
George H.W. Bush’s most memorable campaign phrase in 1988 was “Read my lips: No new taxes!”
But in 1990, Bush faced a rising deficit and congressional Democrats who, like today, insisted on revenue increases to partly offset spending cuts. Bush’s advisers persuaded him to accept the deal. Hardcore conservatives howled, and Bush lost his 1992 re-election bid to Bill Clinton.
A dispirited GOP played a role, but Bush’s slow response to a rapidly deteriorating economy probably played a bigger part. Nonetheless, Republican lore holds that Bush lost because he reneged on a vow never to raise taxes, and thousands of Republican officials since then have sworn not to make the same mistake.
By that year, Bush’s son had succeeded Clinton as president, and he solidified the GOP’s image as a party that doesn’t raise taxes, even when it launches costly new missions. In fact, President George W. Bush persuaded Congress to enact a second major tax cut, on top of the one from 2001. Also in 2003, the United States invaded Iraq and the GOP-led Congress expanded Medicare to cover prescription drugs, both of which were paid for with borrowed money.
“2003 was the most fiscally irresponsible year, possibly of all time,” said David Walker, a former comptroller general who travels the country calling for deficit reduction.
Despite such charges, few Republican officials today say the lesson of 2003 is to raise revenues when programs expand and deficits soar.
—A man named Grover.
Grover Norquist, head of Americans for Tax Reform, has spent years cajoling, persuading and bullying GOP officials into signing a pledge never to support a net increase in taxes. While some Republicans grumble about Norquist’s clout, he still wields enormous influence, partly by warning those who defy his pledge that they will pay a political price.
“My God, what has this country come to when one person has to give you permission to do what’s best for the country?” Clinton said in a recent speech, referring to Norquist.
—A more conservative GOP.
In recent years, staunch conservatives have expanded their influence in the Republican electorate. “The Republican Party is dependent, to an extent unprecedented in recent political history, on a single ideological group,” which is conservatives, writes political analyst Nate Silver.
The trend increases the threat of a party primary challenger to any GOP lawmaker who makes accommodations, such as tax increases, to reach an accord with Democrats.
Today’s Republican Party is so taxaphobic that hardly anyone blinks when Senate GOP leader Mitch McConnell says, day after day, that the nation has a spending problem, not a taxing problem.
Mathematically, of course, that’s not necessarily true. A government can close a budget gap with tax hikes, spending cuts or some combination of the two. Liberal bloggers make this point more robustly than do most Democrats in Congress.
“No, McConnell, we have a revenue problem, not a spending problem,” wrote a blogger named westcoastliberal at Rawstory.com. “If you and your GOP cohorts had not sought tax cuts as a remedy for every problem, we could be sitting pretty as a country right now.”
The Republican Party’s anti-tax stand is aided by a public with conflicting wishes. Voters generally oppose large deficits, higher taxes and cuts in programs that benefit them, a painless but impossible combination.
A March AP-GfK poll found that 62 percent of Americans say cutting government services is preferable to raising taxes in order to balance the budget. Less than one-third favored tax hikes.
But their tune changes when faced with specifics, such as cutting popular and expensive programs that threaten to drive the deficit much higher. A new Pew Research poll asked whether it is more important to reduce the budget deficit or to maintain current Medicare and Social Security benefits. “The public decisively supports maintaining the status quo,” Pew found.
Walker says the growing deficit mirrors a changed society that’s less willing to confront the consequences of spending more money than one makes. For 175 years, he said, the country refused to accept big deficits except in cases of deep recessions, declared wars or national emergencies. “It was part of our culture,” he said.
“About three decades ago, our culture changed,” Walker said. Americans amassed debts on their credit cards and home equity loans, and the government similarly lived on borrowed money. Given voters’ and lawmakers’ reluctance to make sacrifices, Walker said, Congress should enact a system of automatic spending cuts and temporary tax surcharges that would be triggered when the deficit hits designated levels.
Bixby, of the Concord Coalition, said deal-making in Congress “used to be a good thing.” Now, he said, “people seem to be going out of their way to avoid a solution.”
Tax hikes and program cuts are naturally unpopular, Bixby said, but how else can the deficit be tamed?
“Raise revenues and cut spending,” he said. “It’s not that difficult.”