For GOP, no room for tax talk

WASHINGTON — The Republican Party once had a home for the thinking of Tom Coburn, Mike Crapo and Saxby Chambliss. But that party is long gone.

The three senators banded together months ago in support of higher tax revenue as a means of balancing the budget. Even with drastic spending cuts, they concluded the soaring $14.3 trillion debt couldn't be vanquished without additional income.

Such reasoning was common in the GOP circa 1963, when Republicans denounced tax cuts proposed by President Kennedy as a road to red ink and rampant inflation. But today's GOP adheres to a "no new taxes" orthodoxy that has proved far more powerful than the desire to balance the budget. As House Speaker John Boehner, R-Ohio, has said: Raising taxes is "unacceptable and a nonstarter."

This orthodoxy is now woven so deeply into the party's identity that all but 13 of 288 GOP lawmakers in Congress have signed a formal pledge not to raise taxes. The man who invented the pledge, Grover Norquist, compares it to a brand, like Coca-Cola, built on "quality control" so Republican voters know they will get "the same thing every time."

Loyalty to the brand is so strong that no Republican has voted for a major federal tax increase since 1991, Norquist says. More than a dozen governors and hundreds of state legislators now are adherents. And the stance is so well-defended that its followers constantly patrol the state and federal levels for new forms of trespass.

In California, the pledge is interpreted to prohibit state lawmakers from asking voters to decide whether certain existing taxes should be extended. In Pennsylvania, the pledge means no "impact" fee on the environmentally questionable business of extracting gas from underground shale.

On Capitol Hill, Norquist has admonished Coburn, R-Okla.; Crapo, R-Idaho; and Chambliss, R-Ga., for suggesting a tax option for tackling the debt: reducing credits and deductions worth an estimated $1 trillion a year. Although most of the cash would be used to lower tax rates for everyone, a portion would be dedicated to restoring national solvency.

No good, says Norquist's group, Americans for Tax Reform. Under the pledge, raising revenue in any way requires an equal tax cut elsewhere. Yes, that sometimes means protecting tax breaks that Republicans view as bad public policy, Norquist and his supporters say.

The GOP's three-decade campaign against taxes clearly has had an impact. Neither party would advocate a return to the 1970s, when people earning more than $200,000 a year faced a top rate of 70 percent. But the top rate is now half that and, thanks in part to the recent recession, tax collections have fallen to their lowest level as a share of the economy in 60 years.

Major tax cuts in 2001 and 2003 also contributed to that decline — and helped drive up deficits. The GOP's hard line on the issue stands, alongside Democratic resistance to cutting federal retirement benefits, as the biggest obstacle to a bipartisan agreement to tackle that spiraling debt.

"Grover's not realistic," said former Sen. Judd Gregg, R-N.H., a self-described "Reagan robot" elected to Congress in 1980. Gregg retired last year after serving with Coburn and Crapo on the bipartisan fiscal commission that recommended stabilizing borrowing by trimming tax breaks and sharply cutting spending.

With the number of people on Medicare and Social Security set to double, Gregg said, "your government is inevitably going to grow. And you're either going to have to finance that, or you're going to end up running the country into the ditch."

Some prominent Republicans have urged a more flexible approach to taxes in recent weeks. Former Federal Reserve Chairman Alan Greenspan joined the chorus Friday, dropping his support for the 2001 George W. Bush tax cuts. Greenspan told CNBC he's so "scared" by the debt that he favors a return to the higher rates of the Clinton administration.

Martin Feldstein, a Harvard economist who served as chief economic adviser in President Reagan's White House, supports the commission's approach to raising money by ending tax breaks.

But Norquist argues that equating tax breaks with spending "is a threat to the modern Republican Party's worldview," which calls for a vastly smaller government and "dramatically reducing the tax drag on the economy."

That worldview supports eliminating tax breaks, Norquist said, but only if all proceeds are used to push tax rates "down as far as possible." The work of reducing the national debt must be done entirely by shrinking government, he said. Any compromise would hinder that goal and taint the GOP brand.

For decades, Republicans had a reputation as the party of fiscal responsibility. President Eisenhower maintained wartime tax rates, dramatically reducing the national debt. Congressional Republicans objected to Kennedy's tax cut, arguing any reduction in revenue should be pared with spending cuts to avoid ballooning deficits. President Nixon supported extending a surtax to pay for the Vietnam War. His successor, President Ford, opposed a permanent tax cut in 1974, fearing budget deficits, according to historian Bruce Bartlett, a "lapsed Republican" who has written extensively about GOP fiscal policy.

Three factors helped rewrite the party's economic doctrine, Bartlett said: In the late 1970s, key Republicans concluded lower tax rates would boost the flagging economy. The new theory held that such a tax cut would spur so much growth that it would generate more revenue. And the Prop 13 tax revolt hit California, demonstrating the power of tax cuts as a political issue.

Reagan capitalized on growing anti-tax sentiment in his campaign, and quickly pushed a tax package that slashed rates, a move credited with energizing the long-sluggish economy. Reagan went back to Congress in 1986 with a sweeping tax-code overhaul that pushed the top rate down to 28 percent. At Reagan's request, Norquist founded Americans for Tax Reform and the pledge was born.

In his race to succeed Reagan, George H.W. Bush famously embraced the pledge, saying "read my lips, no new taxes." But he raised tax rates as part of a balanced-budget deal with Democrats. His loss to Bill Clinton in 1992 "proved for all time, that even though tax increases may be justified economically, they are never justified politically if you're a Republican," Bartlett said.

"Since then it's been Republican dogma that deficits don't matter and the only thing that matters for the economy is cutting taxes," he said. "And Grover Norquist has become the enforcer of this dogma."