November 28, 2011

Sen. John Kerry recently declared that Grover Norquist, author of the GOP anti-tax pledge, was “the 13th member of our [super] committee” whose supposedly magical hold on Republicans killed any chance of a bipartisan debt-reduction compromise. Kerry is right that there was a mysterious 13th member at the table who caused the supercommittee to fail. But it wasn’t Norquist. It was Occupy Wall Street.

Norquist’s pledge demands that Republicans oppose any and all tax increases. Occupy Wall Street demands that Democrats impose massive tax increases on the wealthiest 1 percent of the country. So which of these competing demands held sway in the supercommittee’s deliberations?

Not Norquist’s. The GOP members of the supercommittee showed they were willing to violate his anti-tax pledge when they put forward a plan, crafted by Sen. Pat Toomey, that would have raised taxes by $250 billion over 10 years by dramatically reducing the deductions and credits wealthier taxpayers could claim to reduce their tax liability. The Norquist pledge specifically states that Republicans must oppose “any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” While the Toomey plan would have reduced tax rates for all Americans, it still would have yielded $250 billion in additional revenue — thus violating the “dollar for dollar” pledge.

But Republicans did not stop there. The GOP plan would have brought in another $40 billion in revenue by using a new measure of inflation to adjust tax brackets each year — which is also a tax increase. And it would have raised another $200 billion in new revenue from things such as increased aviation fuel taxes and security fees, spectrum sales and federal property sales. In all, the GOP put $500 billion in statically scored new revenue on the table. Republicans were willing to compromise — to break their long-standing pledge never to raise taxes in exchange for pro-growth tax reform that permanently lowered rates for all Americans.

How about the Democrats? They made a pledge of their own going into the negotiations. President Obama declared in October that he would veto any deal unless it included $1 trillion in tax increases raised “by asking the wealthiest Americans or biggest corporations to pay their fair share.” This met a key demand of the Occupy Wall Street movement. And during the course of the supercommittee’s negotiations, the Democrats never swerved from their insistence on that $1 trillion in higher taxes.

When Toomey put forward his plan, Democrats could have put Republicans in a bind by making a counteroffer that worked within the Toomey construct. They could have proposed reducing the top rate less (to 32 percent instead of 28 percent) and raising taxes more (by $450 billion instead of $250 billion). Such a counteroffer might have split the GOP. But Democrats could not bring themselves to back off of their pledge to raise $1 trillion in taxes.

It is hard to escape the conclusion that, for Democrats, the fight was never about increasing funds coming into the Treasury. It was about raising taxes on the rich by a trillion dollars as a punitive measure. It was, in the words of Senate Majority Leader Harry Reid, about forcing “millionaires to pay their fair share.” It was about the goals of Occupy Wall Street.

As Occupy Wall Street gained traction during the course of the supercommittee’s deliberations, it emboldened the Democrats to reject compromise and stick to their demands for a trillion-dollar tax increase. They seemed perfectly willing to let the supercommittee fail if those demands were not met. Why? Because the Democrats seem to believe that the Tea Party movement, with its calls for limited government and spending restraint, is waning. They believe it is being supplanted before our eyes by a new grassroots movement in favor of bigger government, higher taxes and more spending.

They are increasingly convinced that fiscal restraint is yesterday’s news and that class warfare is their ticket to reelection in 2012. That notion will be put to the test in 12 months’ time. But for now, let’s not pretend that GOP “intransigence” on taxes and a lone conservative activist were responsible for the failure of the supercommittee. If you want to find the shadowy force that exerted power over half of the members of the supercommittee, dooming it to gridlock and failure, look no further than the encampments of Zuccotti Park.