Abandon no-new-tax pledge? Some in GOP consider the unthinkable.
Exit polls showed that the GOP is seen as favoring the wealthy over the middle class. That may be leading some to reconsider the party's devotion to the no-new-tax pledge – at least for the rich.
As the Republican Party continues its post-election “proctology exam” (as the always colorful former Mississippi Gov. Haley Barbour – a Republican – put it), analyzing what went wrong and how to restore the party brand, we’re starting to hear hints at a prescription that just two years ago would have been unheard of: Maybe it’s time to throw Grover Norquist under the bus.
Mr. Norquist, of course, is the president of Americans for Tax Reform, and the author of the famous “no new taxes” pledge taken by most GOP members of Congress. In years past, if politicians violated – or even threatened to violate – the pledge, Norquist at times responded by running attack ads against them and even supporting primary challengers.
But as the parties begin negotiations over the "fiscal cliff" – the automatic spending cuts and tax increases scheduled to hit at the end of the year – there are signs that Norquist may be losing some sway. For one thing, as The Hill's Russell Berman recently noted, in the next session the number of members who have taken the pledge will go down to fewer than half overall. This is in part because of GOP losses, but also because roughly a dozen newly elected Republicans did not sign it, and a handful of returning Republicans have now explicitly rejected it.
And notably, Republicans are not only making conciliatory comments about new tax "revenue" in general – but some are also explicitly saying they'd accept higher tax rates on the wealthy.
Of course, no one is suggesting that the party should abandon its overall commitment to low taxes. But there is clearly a growing realization among many Republicans that the party’s current image as favoring the wealthy at the expense of the middle class has become politically toxic – as has the perception that the party puts ideological purity before practicality. As Louisiana Gov. Bobby Jindal (R) wrote in an opinion piece for CNN: "We must not be the party that simply protects the well off so they can keep their toys."
Weekly Standard editor Bill Kristol kicked off the "let's consider higher tax rates for the rich" conversation last weekend, when he said on Fox News Sunday: “It won’t kill the country if we raise taxes a little bit on millionaires. It really won’t.” He then asked rhetorically: “Really? The Republican Party is going to fall on its sword to defend a bunch of millionaires, half of whom voted Democratic, and half of whom live in Hollywood and are hostile to Republicans?”
That line was echoed this week by some Republican governors: Virginia Gov. Bob McDonnell told Politico that his party would have to be more flexible when it came to raising taxes on the wealthy. “Elections do have consequences,” he said. “As a piece of an overall package with tax reform that is more comprehensive, I think it’s something that absolutely has got to be discussed.”
Mr. Barbour, the former Mississippi governor, concurred, saying: “If there’s enough savings, if there’s enough entitlement reform, if there’s enough certainty about tax reform in the next few years, I would" let the Bush tax cuts expire on top earners. He added: “You can’t be purist.”
Now, the Republican leadership in Congress has been much more vague. So far, they’ve indicated that while they agree there is a need for new tax “revenue,” they’d prefer that it come from closing loopholes, not raising tax rates. Reading their statements closely, it's possible to interpret them as still relying on assumptions that a cleaner tax code, with lower rates, will automatically lead to greater economic growth, and – presto! – generate more revenue that way. (This is an assumption that Democrats regard as little more than wishful thinking and many economists, too, view with some skepticism.)
Yet some rank-and-file members have begun hinting that they might, in fact, be open to raising tax rates at some point. Rep. Shelley Moore Capito (R) of West Virginia postulated in an interview with FoxNews.com this week that, "What I think you will see is a retention of the tax rates as they are for a year, with the promise that we will get into looking at all revenues – and that could include tax rates."
For his part, Norquist has always maintained that he’s fine with closing tax loopholes, as long as the overall effect is “revenue neutral” – meaning that the federal government should get no net increase in money. And he argues that raising tax rates on the wealthy would be just a first step toward ultimately raising tax rates on everyone.
But at this point, that appears to be a risk that more Republicans are willing to take. If they capitulate on the upper-level tax rates, they may hand Obama and the Democrats a victory – but they could also go a long way toward rehabilitating their own party brand in a way that ultimately gives it broader, more populist appeal. And that may be a more palatable option than risking being seen as the party that holds the US economy hostage for the sake of lower taxes for wealthy 1 percenters.