Republicans Changing Their Tune on Taxes

by John M. Curtis
(310) 204-8700

Copyright August 11, 2011
All Rights Reserved.                                         

             Playing a deadly game of chicken with the U.S. economy, Tea Party-backed Republicans refused to give President Barack Obama the tax hikes needed to show real progress dealing with whopping national debt.  Pushing their demands to the 11th hour, Obama was not able to get the revenue increases from doggedly stubborn Republicans who had signed anti-tax crusader Grover Norquist’s “no tax pledge.”  Tea Party loyalist House Majority Whip Eric Cantor (D-Vir.) was ready to push the federal government into default before raising taxes.  Barack got nowhere pleading with the GOP about increasing taxes on the wealthy—at least until now.  When Standard & Poors downgraded U.S. credit to AA+, Friday, Aug. 5, they made a political statement about Washington’s gridlock.  Unable to get a workable debt-ceiling deal, S&P got fed up and dropped the U.S. credit rating.

            Whatever one thinks of S&P’s decision, it damaged the stock market and U.S. economy.  Allowing any one U.S. company—no matter how influential—to harm the economy sets a dangerous precedent.  U.S. lawmaker must carefully reassess S&P’s actions and provide curbs on arbitrary decisions when it comes to U.S. debt.  As billionaire investor Warren Buffett points out, U.S. debt remains AAA, regardless of S&P’s decision.  If the downgrade did anything constructive, it forced the GOP to reconsider its current “no tax pledge.”  “I don’t want to rule anything in or out,” said Rep. Dave Camp (R-Mich.), head of the powerful tax-writing House Ways and Means Committee.  Before the downgrade, it was blasphemy for the GOP to consider raising taxes.  “I am willing to discuss all issues that might help us reduce our short and long-term debt and grow our economy.”

            Debating in Iowa tonight, GOP presidential candidates won’t offer any flexibility on taxes.  Former Massachusetts Gov. Mitt Romney got into a heated argument with a prospective voter at a Des Moines town hall meeting, debating how to save Social Security.  While polling well at the moment heading into Iowa, Romney faces some real challenges in Iowa among Christian evangelicals, already suspicious of a Mormon candidate.  Iowa’s religious conservatives look forward to this weekend’s expected announcement that Texas Gov. Rick Perry plans to jump into the race.  Neither Romney nor Perry will echo Camp’s sentiments that everything should be on the table.  “We do need to restore confidence and have substantive decisions about our short and long-term debt,” said Camp, signaling his openness to consider some tax hikes.  So far, bashing Obama is the only thing GOP candidates have in common.

            Tea Party loyalists like Rep. Michele Bachmann (R-Minn.) and former Alaska Gov. Sarah Palin want to shrink the federal government, ending entitlements as we know them.  With riots in the U.K, comparable austerity programs could result in violent protests here in the states.  Republican candidates like to blame today’s whopping budget deficits and national debt on liberal entitlement programs.  Camp is part of the 12-member bipartisan panel designed to find $1.5 trillion more in savings for the federal budget.  Called the “super-committee,” they must make recommendations by Dec. 23 or some $1.2 trillion in automatic cuts will be triggered in 2013.  Despite objections from GOP candidates and Party purists, the GOP will be forced to include revenue enhancement in the final bill.  Only a dramatically improving job picture could forestall the expected budget cuts.

             Instead of bashing Obama or sticking to a “no tax pledge,” the GOP should focus on real solutions to fixing the U.S. economy.  Slashing government jobs does nothing to improve the economy, nor does promising more tax cuts to the wealthy.  While it’s nostalgic to talk about Reaganomics, the Trickle Down or Supply-Side theory hasn’t produced the balanced budget as promised.  GOP candidates all agree on establishing a  Constitutional balanced budget amendment.  Yet they can’t answer what they would do if the government ran out of cash.  Tossing out government jobs is no answer to solving the nation’s deficit crisis.  Lawmakers should figure out how to ban short selling, the practice of profiteering on a down market.  Only cutting taxes or government programs isn’t enough to deal with today’s fiscal realities.  At some point, even GOP politicians agree that taxes must go up.

             Debating tonight in Iowa, GOP presidential candidates don’t agree with Camp that some type of tax increase must accompany more budget cuts.  Unless the U.S. wishes to face the kind of rioting in the U.K, the 12-member panel must tread carefully on Social Security, Medicare and Medicaid.  It’s not fair to balance the government’s books on the backs of the disabled, poor and seniors.  Before S&P’s downgrade, it’s clear that the GOP wouldn’t give Obama one inch when it came to raising taxes.  Now that the GOP is taking some heat for pushing things too far, they’re willing to consider raising taxes.  With tax rates at the lowest levels in recent history and billionaires like Buffett asking the government to raise his taxes, the GOP will have to take a more balanced approach.  Whether the GOP want to admit it or not, Norquist’s “no tax pledge” is rapidly becoming obsolete.

John M. Curtis writes politically neutral commentary analyzing spin in national and global news.  He's editor of OnlineColumnist.com.and author of Dodging the Bullet and Operation Charisma.

©1999-2005 Discobolos Consulting Services, Inc.
(310) 204-8300
All Rights Reserved.