No-tax-hike pledge creates Republican rift, potential roadblock to deficit deal

Republicans are feuding over whether to abandon the party’s long-held opposition to higher taxes in pursuit of a deficit-cutting deal with Democrats.

The rift in the Republican ranks has surfaced in a bitter back-and-forth between two heroes of the conservative movement: Sen. Tom Coburn of Oklahoma, who has been working with a bipartisan group of senators on a compromise to reduce government borrowing, and Grover Norquist, author of the no-tax-increase pledge that has become a rite of passage for GOP candidates.

At stake is a pillar of Republican orthodoxy that has for decades united every wing of the party in a quest to shrink government’s reach.

As the battle over the federal deficit escalates in Washington, the two men are sparring over Coburn’s seemingly narrow proposal to eliminate a $5 billion annual tax break awarded to companies that blend ethanol into gasoline. But both sides say this cuts to the core of a quandary for the GOP: Will the cause of trimming deficits run aground on the conservative principle that the government must not increase the amount of money it takes in through taxes?

Coburn has been the most visible Republican to challenge Norquist, perhaps the country’s most influential anti-tax advocate, but other Republicans have been willing to discuss a budget deal that would include raising more money through taxes, along with making deep spending cuts, to help reduce the deficit.

These include stalwart conservatives such as Sens. Saxby Cham­bliss (R-Ga.) and Mike Crapo (R-Idaho). And on the ethanol issue, Coburn has drawn support from such conservative-movement fixtures as the Heritage Foundation and the Wall Street Journal editorial board.

And even some House leaders, including Budget Chairman Paul Ryan (R-Wis.) and Ways and Means Chairman Dave Camp (R-Mich.), have left the door open to negotiation.

For anti-tax purists, including many in the Republican Party, eliminating the ethanol break is unacceptable — measures that roll back corporate subsidies, individual deductions or loopholes of any sort without comparable tax cuts elsewhere are considered tax increases.

The tensions between Nor­quist’s Americans for Tax Reform and Coburn’s office have intensified, with each side sending the other terse, accusatory letters claiming to be the true conservatives. Coburn charges that the tax pledge, as interpreted by Norquist, is inflexible, and Coburn’s spokesman now labels Norquist the “chief cleric of sharia tax law.”

“If we don’t do something, what we’ve done is put the country at risk,” Coburn said in an interview. “I agree we ought to cut spending, but will we ever get the spending cut to the level that we need to without some type of compromise?”

Norquist, who introduced the Taxpayer Protection Pledge 25 years ago, charges that Coburn and other Republicans exploring bipartisan compromises are violating party doctrine — and flirting with political suicide. He argues that bipartisan deals struck by Presidents Ronald Reagan in 1982 and George H.W. Bush in 1990, both of which entailed increased taxes, resulted in bigger government rather than spending cuts that both men thought they had secured.

“This is a fantasy on the part of the liberal Democrats that the Republicans would be stupid enough to repeat 1990 and throw away a winning hand politically,” Norquist said. “Why would you elect a Republican Senate if they just sat down with Obama and raised everyone’s taxes?”

The pledge

Breaking with Norquist would be risky for any Republican. He is a center of gravity in conservative politics, convening weekly strategy meetings with activists and GOP officials. His group says 41 senators, including Coburn, and 237 House members have signed the pledge, in which candidates vow to oppose “all efforts to increase the marginal income tax rate for individuals and business” as well as “any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”

The political sensitivities for
Republicans were underscored Wednes­day when President Obama delivered a partisan speech demanding higher taxes for the rich. The confrontational remarks could make it more difficult for Republicans such as Coburn to negotiate a compromise with Democrats involving changes in the tax code.

How the debate among Republicans is resolved in the coming weeks will play a large role in determining whether a grand bipartisan bargain on deficit reduction is possible. “There’s a significant split over whether to put taxes on the table,” said Dan Mitchell, an economist at the libertarian Cato Institute and a Norquist ally.

Mitchell said the disagreement largely pits House and Senate Republicans against each other and gives Democrats a potential political edge. “Obama has it within his power to drive a big wedge between House and Senate GOP-ers and turn the tax issue from something that works on behalf of Republicans into something that works against them,” he said.

The GOP’s challenge

The challenge confronting Republicans who could be open to higher taxes was evident this week in remarks by Chambliss, who with Coburn is part of the Senate’s bipartisan “Gang of Six” working on a deficit-reduction plan.

“You can’t solve this debt problem with just reductions in discretionary spending,” the senator from Georgia told CNN. “You can’t solve it just by attacking and reforming entitlements. You’ve got to look at the revenue side also.”

Chambliss said the group was looking at reductions in overall rates for people and businesses coupled with the elimination of “tax expenditures,” a term that refers to breaks and loopholes.

“If we don’t want to pay the debt back, then we could just not worry about the revenues, but the fact is we’ve got a $14 trillion debt staring us in the face and revenue has to be on the table if we’re serious about attacking that debt,” Chambliss told the network.

Still, after Obama’s speech, Cham­bliss said he was “disappointed to hear the president advocate for tax increases.” Chambliss added that he would “continue to advocate for tax reform that lowers individual and corporate rates.”

Meanwhile, Camp, the House Ways and Means chairman, is now at work on tax overhaul legislation that would eliminate deductions and lower rates. Though Camp has said his plan would not be designed to raise more money through taxes, he has left the door open to compromise.

Ryan said in an interview that he advocates a “pro-growth” tax overhaul that would not be designed to draw in more tax receipts. But if a more efficient tax code spurs economic growth, he said, “then you do get more revenues. Higher GDP means more revenue.”

Such a policy would not violate the Norquist pledge. But asked whether there’s any room for negotiation over the Democratic goal of collecting more money through higher taxes, Ryan said, “I don’t know the answer to that.”

Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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