Budget stalemate: Why America won't raise taxes
Budget stalemate has many on Capitol Hill crunching numbers. With any new budget, taxes may be the real third rail of politics. Can the U.S. solve its fiscal woes without more revenue?
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When first introduced in 1986, according to ATR president Grover Norquist, 100 House members and 20 senators signed on. Since then, the number has crept up steadily, to the point where now more than half the members of Congress have agreed to the pledge: 40 out of 47 Republicans in the Senate, along with one Democrat and one Independent. In the House, 235 out of 242 Republicans have signed on, along with two Democrats – a high-water mark, according to Mr. Norquist.Skip to next paragraph
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"It is a factor in every Republican primary," says Norquist. "[Candidates] know voters reward people who take the pledge and punish people who raise taxes."
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Even talking about raising taxes can get a lawmaker in trouble. Recently, three Republican Senate members of the bipartisan "Gang of Six" working behind the scenes to come up with a compromise on deficit reduction suggested that revenues would have to be "on the table." Immediately, Norquist sent a public letter warning that any tax package that wasn't "revenue neutral" – that didn't include the same amount in tax decreases to offset any tax increases – would violate the pledge.
The three senators responded with a placating letter of their own, saying: "Like you, we believe tax hikes will hinder, not promote, economic growth," adding, "we look forward to again working with you and all interested parties to support a proposal where any increase in revenue generation will be the result of the pro-growth effects of lower individual and corporate tax rates for all Americans."
So far, most pledge signers have remained remarkably true to their word. If you look over recent tax enactments by Congress, the trend is clear. Over the past 15 years, according to the Washington-based Tax Policy Center, the only piece of major tax legislation passed that increased taxes was the Obama health-care plan, which will impose new levies on upper-income taxpayers starting in 2013. By contrast, some 18 major pieces of legislation have been enacted since 1997 that have served to reduce the tax burden in one way or another, either through rate cuts or deductions and credits.
The most recent was the move last December to extend the George W. Bush tax cuts. The vote came just weeks after President Obama's Deficit Reduction Commission released its report calling for reduced spending, entitlement reform, and higher tax revenues.
Yet with the economy still recovering from recession, Congress voted to extend the tax cuts across the board for two more years, despite numerous polls showing voters favored letting them expire for the wealthiest taxpayers. Several Republicans eyeing a White House run – including Mr. Gingrich and former Massachusetts Gov. Mitt Romney – criticized lawmakers for not extending the tax cuts permanently.
"I don't think there's any conceivable way, under current circumstances, that any Republican would vote for any kind of tax increase whatsoever," says Bruce Bartlett, a former economic adviser to President Reagan and a Treasury official during the first Bush administration, who has become an outspoken critic of the Republican Party's current economic policies. "Republicans are absolutely convinced that to support tax increases guarantees their [electoral] defeat."