In terms of critical conservative iconography, few standards are more important than Grover Norquist's Americans for Tax Reform pledge: Republicans -- and some Democrats -- have signed his anti-tax oath for decades now as a rite of electoral passage. Nearly 70 percent of federally elected Republicans have made the pledge.How's that? The pledge states that signees must "oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates." While that might sound like the framing for a base-broadening, loophole-closing grand bargain, it isn't. Instead, it ensures that any tax overhauls remain revenue neutral, essentially taking tax increases off the table for balancing the budget.
With grand bargains out of the question in this political environment, in practice the pledge means that Republicans oppose ending tax expenditures for special interests, since attempts to nibble around the tax code don't always come with offsets -- or they're designed to reduce the deficit. So last year, when Obama proposed ending tax credits for companies that outsource their work overseas, which would have saved well over $100 billion, Norquist and his organization, Americans for Tax Reform, opposed the move.
"[Our statement] did not defend the tax deduction," Norquist told reporters on a conference call last night. "If you want to get rid of it, just make it revenue neutral by not making it a tax increase."
Congressional Democrats, sensing opportunity, have now made the pledge a campaign issue. Last year, the Democratic Congressional Campaign Committee ran ads on the issue in a special election for New York's 23d District, where Democrat Bill Owens would defeat Doug Hoffman, whose Tea Party-fueled campaign overtook that of the original GOP nominee, Dede Scozzafrava.
Now they're using the attack in a Hawaii special election to replace former Democratic Representative Neil Abercrombie, who is in the hunt for the governor's mansion. The DCCC has launched ads against Republican Charles Djou that say he "signed a pledge that protects tax breaks for companies that send jobs overseas." That's a serious charge with unemployment sitting at nearly 10 percent.
Norquist and his allies responded last night with a conference call and statement attacking the DCCC, and Djou has complained about "mainland interference" in his race, but neither Norquist nor Djou has announced their opposition to the tax break or, in the spirit of the pledge, described offsets that would allow Djou to support overturning the credit. In the past, Norquist has attacked pledge signees who voted to end tax expenditures. For Norquist and his organization, "reform" just means tax cuts.
"We are for rate reduction and broadening; we oppose people saying they are for tax reform when what they really want to do is raise taxes," Norquist says.
Unfortunately, experts from the right and left agree that any kind of long-term deficit reduction plan will likely require a combination of both spending controls and revenue increases. That revenue increase can come in a variety of ways, but the math is clear: You can't solve the deficit problem with spending cuts alone, especially because Americans love spending.
This episode shows that the Democrats still hope to maximize the advantage they had on the tax issue in 2008, when Obama outpolled Sen. John McCain on who Americans trusted to manage tax policy. While the Democrats won't be so honest as to admit that tax increases will come sometime during this administration or the next, it's good to see them using strong policy arguments to advance the very real notion that tax expenditures are spending, and spending that is often directed toward special interests. If this position gains traction in the Hawaii race, you can expect to see it become a major part of the 2010 midterm conversation.
-- Tim Fernholz
