Cooler heads on Capitol Hill as 'super committee' toils to cut US deficit?
Bipartisan support for Congress's 'super committee' and its deficit-busting work has lately come to the fore. Moreover, some Republicans seem ready to redefine the 'no tax pledge.'
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Mr. Norquist, however, is not taking the challenge lying down. "Democrats want to raise taxes. They don't want to cut spending," he says in an interview. "Republicans don't want to raise taxes. They want to cut spending. That's exactly what we want the narrative to be between now and the next election cycle."Skip to next paragraph
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People remember what happened after President Reagan struck a 1982 deficit-reduction deal with Democrats – one that included tax hikes – and after President George H.W. Bush did the same in 1990, Norquist told C-SPAN's "Washington Journal" on Oct. 31. Taxes went up and, contrary to congressional promises, future spending went up, too. "That's why we're going to hold the line," he said.
Even so, some Republicans are rethinking their commitment to the pledge, especially the ban on getting rid of tax breaks without offsets.
Asked on Nov. 1 whether he could vote to end tax breaks without offsets, Sen. Pat Toomey (R) of Pennsylvania, a super committee member, said: "If you lower marginal rates and simplify the [tax] code, you reduce the misallocation of resources that is produced by the code, and if you preserve the lower rates for capital formation and dividends, then yes, I think so."
Does that mean he could vote along these lines on the super committee? "With a lot of qualifiers and under certain circumstances, I could do it," he said.
Tax expenditures in 2010 accounted for almost $1.1 trillion in revenues that would otherwise have been collected by government. Spending on Medicare and Medicaid, by contrast, was $701 billion that year, and for defense it was $689 billion, according to government figures.
"I hope that a big part of what the super committee will do is to look at many of those tax expenditures, eliminate them, and lower tax rates for everyone," said Sen. Bob Corker (R) of Tennessee. "That would spur tremendous economic growth in our country."
Some conservatives say the debate has shifted since the tax pledge was born in 1986, noting that GOP presidential contenders are focused not on tax cuts but on a flatter, fairer tax code. "The debate is changing. It's a different era," says a spokesman for a prominent conservative think tank, speaking off the record to avoid a public rift with Norquist.
Rep. Frank Wolf (R) of Virginia, who signed the bipartisan letter, challenged Norquist's clout Oct. 4 on the House floor: "Everything must be on the table, and I believe how the 'pledge' is interpreted and enforced by Mr. Norquist is a roadblock to realistically reforming our tax code."
House GOP leaders do not publicly criticize the pledge. But they are encouraging lawmakers to focus on policies that will promote growth, such as lower tax rates, but not necessarily to find offsets for every tax break to be axed.
"The House Republican leadership is working very hard trying to talk to people and say to them: These are loopholes. These are picking and choosing winners in the marketplace. It's everything we've been against," says Steve Bell, senior director of the Economic Policy Project at the Bipartisan Policy Center in Washington. "Whether they have persuaded enough members, I don't know."
Economists such as Martin Feldstein, chairman of the Council of Economic Advisers under Reagan, and Donald Marron, director of the Urban Institute-Brookings Tax Policy Center, are urging lawmakers to seek deficit reduction in a tax code full of loopholes and subsidies that distort the economy and harm growth. That argument has not yet won over a critical mass of conservative lawmakers, for whom lower taxes and smaller government is a mantra. But examples in the tax code, such as $6 billion in ethanol subsidies, are winning converts.
"Smaller government and lower taxes don't completely mesh anymore, and conservatives are beginning to realize this," says Mr. Marron. For instance, "by getting rid of the tax advantage for ethanol, you can make government smaller by increasing tax revenues."
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