It is Wolf’s economic case that merits more attention. He is one of the House’s old Republican bulls, having taken office the same year that Ronald Reagan became president. While America’s deficit problem is unprecedented, Wolf has been around long enough to know how it is likely to be resolved. Congress, he argues, will need to confront “out-of-control entitlement costs” as well as to pass comprehensive tax reform “to rid our tax code of earmarks and loopholes.”
In Wolf’s view, one of the main obstacles to fiscal seriousness is Norquist’s anti-tax pledge, signed by nearly all Republican members of the House (though not by Wolf himself). The document forbids support not only for tax increases but also for the closing of tax loopholes that aren’t offset by spending cuts. So tax expenditures — specific tax benefits to favored interests and causes — are protected. “NASCAR, dog and horse tracks, tackle-box makers, railroads, mohair producers, hedge-fund managers, ethanol producers, automakers and video-game developers — all receive tax breaks which subsidize their businesses,” explains Wolf. “According to Mr. Norquist’s pledge, anyone who opposes the myriad of tax subsidies that allowed General Electric to avoid . . . taxes last year would violate ‘the pledge.’ ”
Not all tax expenditures are bad policy — the deduction for charitable giving comes to mind — but many are. Making them effectively sacrosanct undermines the possibility of political agreement. Serious bipartisan proposals, such as the Bowles-Simpson recommendations, would be ruled out before a negotiation even begins. “Have we really reached a point,” asks Wolf, “where one person’s demand for ideological purity is paralyzing Congress to the point that even a discussion of tax reform is viewed as breaking a no-tax pledge?”
It is not, unfortunately, only one man’s ideological purity that stands in the way of agreement. President Obama’s approach to taxes is also profoundly unproductive, focusing on “fairness” rather than competitiveness, and on small, punitive measures rather than large structural reforms. His rhetoric — which can sound like the chants at Occupy Wall Street — is making it easy for Republicans to take an absolutist anti-tax position while complicating the lives of Republican tax reformers such as Sen. Tom Coburn.
On entitlements, the situation is no better. Democratic leaders actively oppose meaningful reform. Republicans — despite taking the risk of voting for the budget put forth by Rep. Paul Ryan — don’t seem capable of making a coherent case for structural changes in Medicare that would stabilize the program and reduce future risks to seniors.
These failures not only betray the public, they also reflect the public. “I don’t think it’s fundamentally a liberal and conservative ideology problem,” says Yuval Levin of the Ethics and Public Policy Center. “I think it’s a middle-class inertia problem. The resistance to Medicare reform has to do with the anxieties of the elderly about being made to pay more, and the resistance to tax reform has to do with the anxiety of the middle class about having to pay more. They may be wrong to think these reforms would have these results, but the fears are powerful.”
The only possible answer, however, to inertia is leadership. Medicare reform needs Democratic champions, who do not currently exist. Tax reform needs Republican champions, who are currently scattered and isolated. Ideological fundamentalists — from Norquist to MoveOn.org — make the emergence and work of such leaders more difficult.
Wolf’s frustrated attack on Norquist’s pledge is really a defense of the political profession. Pledges are designed to constrain politicians, who are viewed by activists as eager for corrupt compromise. But American political institutions are designed for prudent compromise in the public interest — which is what our fiscal crisis now requires. So maybe the time has come to allow politicians to do their resented, essential, noble work.
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