“Raising taxes slows the economy. Raising taxes kills jobs. Government spending does not create jobs. The idea that if you take a dollar out of the economy from somebody who earned it, either through debt or through taxes, and give it to somebody who is politically connected, that there are more dollars around? That if you stand on one side of the lake and put a bucket into the lake and walk around to the other side in front of the TV cameras, pour the bucket back into the lake and announce you’re stimulating the lake to great depths. We just wasted $800 billion on stimulus spending that added to debt that killed jobs. There are fewer jobs than before.”
— Anti-tax advocate Grover Norquist, on “Meet the Press,” Nov. 27, 2011
“In 1982, the Democrats said, ‘Gee, if you let us raise taxes, we’ll cut spending $3 for every $1 of tax increase.’ Taxes were raised. Spending didn’t go down, spending went up. The same thing happened in 1990, although George Bush -- Herbert Walker Bush -- was promised $2 in phony spending cuts for every dollar of tax increase. Taxes went up, spending actually increased. It wasn’t cut. Twice the Democrats have said let’s raise taxes and cut spending; twice taxes were increased, spending was not reduced at all.”
— Norquist, later in the same program
“They weren’t real reductions in rates. The 2003 rate reductions you had on cap gains and others -- that gave you four years of strong economic growth that lasted until the Democrats won the House and Senate, and you knew those tax cuts were going away.”
— Norquist, in the same program
Grover Norquist, the president of Americans for Tax Reform, has been in the news lately because Democrats charge (without much evidence) that he is single-handedly responsible for the collapse of the debt supercommittee because Republicans are afraid of violating his no-new-taxes pledge.
We don’t fact check political philosophies, but Norquist’s appearance on “Meet the Press” on Sunday gives us an opportunity to look at some of the facts that he uses to make his case. As can be seen from the excerpts of the interview above, Norquist is unabashedly partisan — in his view, economic growth literally ends the day Democrats win power in Congress. That already begins to stretch the bounds of economic logic, but what about some of his other assertions?
A key part of Norquist’s case is that government spending is always bad and that, despite repeated promises of cuts by Democrats, it always goes up. We take no position on his economic argument about spending, but the notion that spending has always gone up only makes sense if you look only at raw dollar spending — which does not make much sense at all.
The best way to look at the growth of government spending is whether it goes up as a percentage of the overall economy (gross domestic product). That way, you account for changes in inflation, population growth and other factors.
As we have noted before, defense spending technically remained constant from 1987 to 1994 — $282 billion a year. But look what happened to the military during those seven years: The number of troops fell from 2.2 million to 1.6 million, the number of Army divisions was slashed from 28 to 20, Air Force fighter wings dropped from 36 to 22 and Navy fighting ships declined from 568 to 387. That’s because inflation over time ate away at the value of those dollars. So, by most measures, defense spending was trimmed in that period, though under Norquist’s logic, not a penny was cut.
So what actually happened in 1982 and 1990, when the rate of government spending is considered as a percentage of gross domestic product? According to the White House historical tables (Table 8.4), from 1982 to 1983, nondefense discretionary spending fell from 4.3 percent to 4.2 percent of GDP — and then kept falling until it reached 3.4 percent of GDP in 1989. (Defense spending did increase, but that was at Reagan’s urging.)
The results are not much different if you look just at inflation-adjusted figures (Table 8.8). In fact, another conservative analyst, Veronique de Rugy of the American Enterprise Institute, in 2004 looked at the White House historical tables, used inflation-adjusted numbers, and hailed Reagan as a “champion budget-cutter.” She concluded that he “sought — and won — more spending cuts than any other modern president.” So much for Norquist’s theory that Reagan was thwarted by Democrats in his efforts to cut domestic spending.
The same holds true for the George H.W. Bush budget deal of 1990, which was followed by Bill Clinton’s 1993 deficit-reduction package. Domestic discretionary spending goes up slightly from 1990 to 1991 as a percentage of GDP (let’s not forget there was a recession, which slows GDP growth) but then goes on a dramatic downward spiral, from 8.7 percent of GDP in 1990 to 6.2 percent in 1999.
Finally, let’s examine Norquist’s claim that “we just wasted $800 billion on stimulus spending that added to debt that killed jobs. There are fewer jobs than before.”
First of all, Norquist appears to have forgotten that, depending on how you do the math, the stimulus bill included between $218 billion and $288 billion in tax cuts. Norquist is a huge fan of marginal rate reductions so perhaps he does not consider items such as the “Making Work Pay” tax credit to be a true tax cut. But it is simply incorrect to refer to “$800 billion of stimulus spending.”
Secondly, Norquist is playing a trick with numbers when he claims “there are fewer jobs than before.” That’s correct only in the most technical sense.
When the stimulus bill was passed in February 2009, there were 132.8 million jobs in the United States, according to the Bureau of Labor Statistics, and as of last month, there are 131.5 million jobs. But that assumes the full force of the stimulus took effect immediately, which is absurd. The recession had not ended yet and job losses continued for several months before the stimulus kicked in.
While different studies disagree on the impact of the stimulus, most conclude it had some impact.— and none say it “killed jobs.” The nonpartisan Congressional Budget Office estimated that it “increased the number of people employed by between 1.4 million and 3.3 million.”
The Pinocchio Test
Norquist has every right to his opinions on the dangers of excessive government spending and taxation, but he needs to come up with a better set of facts to make his case. His description of recent budgetary history bears little relation to the historical record. His comment on the stimulus bill was also highly misleading.
Check out our candidate Pinocchio Tracker
UPDATE: Americans for Tax Reform posted a response to this column, which argued we made “a classic mistake which is ironically one of the major things fact check websites call others on--moving the goalposts.” Readers can judge for themselves, but as we think it simply confirms that looking just at raw dollars does not tell a complete story. Interestingly, ATR made no comment on our analysis of Norquist’s statement on the stimulus bill.
Read more on Grover Norquist: Among GOP, anti-tax orthodoxy runs deep