Every night, Grover Norquist goes to bed and dreams of a world without taxes. A world where private companies unilaterally control America’s economic future, and the government is simply there to act as a bumbling referee. In Grover’s fantasy world, nearly everything is privatized, and all those dastardly poor people are thrown off of the entitlement programs they never deserved in the first place.
This world is also a fallacy.
Norquist, purveyor of the famed “Taxpayer Protection Pledge,” is immovable on taxes. Even in the midst of a monstrous debt problem, he firmly believes that no tax reform involving raising a dollar more is allowable. Since 1986, he has extended a pen to every American Representative and Senator, and nearly every Republican has signed his pledge with gusto.
But the winds of change are howling. Following President Barack Obama’s victory and a surprisingly successful election showing by Democrats, Republicans are bracing for impact. The fiscal cliff looms ever larger, and if a deal isn’t negotiated soon, we are headed for an economic Armageddon.
With this in mind, Republicans have begun repudiating Norquist’s pledge. In the past week or so, Senators Saxby Chambliss and Lindsey Graham and Representative Peter King have all announced that they are willing to negotiate on taxes.
The reality is that, while no one likes taxes, they are a necessary evil. Anyone who thinks we can evade this economic catastrophe without increasing revenue is unmistakably wrong. Sure, no new taxes sounds great, but the world changes. New technologies come about, new problems spring up, and sometimes a debt crisis goes from being the gorilla in the room to the King Kong on the roof.
What’s so frustrating about the Republican unwillingness to compromise is that it’s made solving the debt crisis increasingly difficult, and made failure more costly. Democrats do bear some blame — as Republicans aren’t the only stubborn ones — but it seems that many Republicans would be satisfied with a Pyrrhic victory of low taxes and a destroyed economy. Even former Republican Senator Alan Simpson, co-chair of the National Commission on Fiscal Responsibility and Reform, described Norquist’s pledge, and the Republican ideology at large, as “no taxes, under any situation, even if your country goes to hell.”
Two summers ago, during the height of the debt ceiling talks, President Obama and House Speaker John Boehner were on the cusp of making a deal, but it fell apart. Republicans said the President threw in more revenue increases at the very end of the negotiations, thus tanking the plan. A more troubling accusation, however, is that radical Republicans were unwilling to give up a single inch. Speaker Boehner’s failure to get his party onboard is indicative of an increasingly radicalized party that simply won’t compromise. With “Cut tax rates!” as their cry, every Republican presidential candidate asserted that he or she wouldn’t accept a tax reform plan that raised a single dollar more in revenue. That’s insane.
Without compromise, what could happen to our economy? What would cutting taxes and cutting spending do for the country? The most visible result would be a failure to address the debt. America’s most pressing issue would remain a frightening problem if no revenue comes in. Yes, cutting spending would stop it from growing in theory, but without any revenue coming in, the deficit would not decrease. It may even continue increasing due to mounting interest payments owed to foreign creditors.
Republican tax ideology also doesn’t account for shifting economic environments. In a normal economic state, people are more willing to spend and invest, but when the economy is in a slump, this simply isn’t true. It’s a basic tenet of behavioral economics that people hold on to their money in recession years, the rich included. If tax cuts are given to the rich as a means of catalyzing investment and growth right now, it won’t work. Those disproportionally great tax savings will be held on to until the recession improves, thus defeating the purpose of the cuts. So-called “job creators” may create jobs in boom times, but in a bust, they’re just as keen to wait it out.
Lastly, it’s ignorant that Republicans think there is only one path to growth. Take Singapore as an example. That country forces its people to save a huge percentage of their money. While I do not agree with anything being forced, it’s an interesting experiment to think about due to its success. Singapore uses the money to invest in domestic industry and infrastructure, and it has catapulted the country into a level of prosperity it merely dreamed of decades ago. The lesson learned is that a government does have the ability to foster growth when the money is used the right way.
That is one issue that the Republicans and I agree on, that our money is mismanaged. It’s not the taxation that is the problem, it’s the incompetence of our elected officials. Our government does mess up — a lot — but taking away its funds won’t help anyone.
If Grover Norquist has his way, and no new taxes are put in place, no deductions or loopholes fixed, and no new revenue obtained, what next? If the plan succeeds, America’s poor will be poorer than ever, even while Republicans proclaim success. And if the plan fails? Well, the solution will be obvious: cut tax rates again!
By: Andrew Eckhous
(Photo by Steve Rhodes under a Creative Commons license)