How Can Anyone Take The GOP Seriously: The Dismal Republican Record On Taxes
“In the present weak economic climate,” a group of conservatives, including Newt Gingrich, wrote in an open statement, “we believe that to restore the health of the economy and put Americans back to work, America should follow a course against high taxes and federal spending.”
The White House was unmoved. “Republicans may feel they can’t go to voters after supporting a tax increase,” one administration official told the New York Times. “We’ve got to convince them that the situation won’t be as devastating as it would be if the tax bill is sabotaged.”
The latest moves in the debt ceiling debate? Not quite: The administration was Ronald Reagan’s, and the year was 1982. With his previous year’s landmark tax cuts having exploded the budget deficit, Reagan had reluctantly backed a tax increase to bring it back under control, prompting a minor conservative uprising led by then Rep. Jack Kemp and which included then backbench House member Gingrich. “You can’t have the largest tax cut in history and then turn around and have the largest tax increase in history,” one conservative rebel groused.
Right-wing economists issued dire forecasts. Arthur Laffer, widely described as the father of supply-side economics, warned that the bill would “stifle economic recovery” and “lengthen and deepen the recession.” The president of the U.S. Chamber of Commerce wrote that the tax hike would “curb the economic recovery everyone wants,” adding: “It will mean a lower cash flow as more businesses pay more taxes, with a depressing effect on stock prices. It will reduce incentives for the increased savings and investment so badly needed to improve productivity and create more jobs.” As Bruce Bartlett, an early supply-sider and Reagan aide who has since recanted the faith, noted last month, “It would be hard to find an economic forecast that was more wrong in every respect.” Real gross domestic product grew at 4.5 percent in 1983 and 7.2 percent in 1984, while unemployment fell from 10.6 percent in December 1982 to 7.1 percent in 1984.
Just about the only thing the conservative rebels got right back in 1982 was Gingrich’s comment to the New York Times that the skirmish was the “opening round of a fight over the soul and future of the Republican Party.” Looking back, the extent to which the conservatives won the fight within the party while losing the war with economic reality is fairly astounding. In the nearly three decades since, the Republican feeling toward tax increases has moved from Reaganesque dislike but acceptance (he signed tax increases into law in seven of his eight years in office) to their current, blindly absolutist position flatly opposing any tax increases at all, even in the face of spiraling deficits and possible economic default.
Witness comments like House Speaker John Boehner’s that “raising taxes is going to destroy jobs.” The rhetoric hasn’t changed much since 1982, but the accumulated evidence against this GOP dogma is overwhelming.
Gingrich was again at the forefront of the fight against taxes in 1993 when he warned that the Clinton budget plan “will in fact kill the current recovery and put us back in a recession.” Rep. Dick Armey, who would go on to be House majority leader and now is a Tea Party godfather, warned that “the impact on job creation is going to be devastating.” Texas GOP Sen. Phil Gramm warned that the budget deal was a “one-way ticket to a recession,” adding that Clinton’s would be one of the jobs killed by the bill. (Gramm would seek Clinton’s job, but couldn’t best Bob Dole; he was last seen being muzzled by John McCain’s presidential campaign in 2008 after calling the country a “nation of whiners.”) Laffer warned that “Clinton’s tax bill will do about as much damage to the U.S. economy as could be feasibly done in the current political environment.” Boehner himself dismissed the Clinton plan as “Christmas in August for liberal Democrats: more taxes, more spending, and bigger government.”
He got the Christmas part right. Unemployment, which had been 7.1 percent in January 1993, fell to 5.4 percent by the end of 1994. Real GDP grew from 2.9 percent in 1993 to 4.1 percent in 1994. The final tally of the Clinton years was 23 million new jobs and a budget surplus.
Clinton and his villainous tax hikes were followed by George W. Bush and his cure-all tax cuts. “Tax relief will create new jobs,” Bush argued in April 2001. “Tax relief will generate new wealth.” When the bill was enacted that June, GOP Rep. Mike Pence (now running for governor of Indiana) gushed that they would “stimulate our economy” and “put the ax to the root of the Internal Revenue Code as it wages war on the American dream.”
How’d that turn out? From 2001 to 2007, jobs grew at one fifth the pace of the 1990s, the slowest rate in the post-World War II era. GDP in those years grew at half the rate of the 1990s. Oh yeah, and the deficit exploded. Fully 10 years after the largest tax cuts in history, the economy had shed 1.1 million jobs. It seems Pence’s ax was put to the root of the American dream itself.
Given the historical and economic record, one has to ask: How can anyone take the GOP seriously, especially when they are playing fast and loose with economic disaster in service to a political philosophy that not even their main icon—Reagan—followed with such monomania?
Decrying the Clinton tax plan in 1993, Boehner recalled the quote: “Those who do not learn from history are doomed to repeat it.” He went on, “It very appropriately applies to Congress today.” That’s one piece of rhetoric Boehner really should recycle. And learn from.
By: Robert Schlesinger, U. S. News and World Report, July 13, 2011
Mitch McConnell’s Insincere Invitation
One can only dream of a Republican Party led by grown-ups. Instead, we have this.
Senate Republican Leader Mitch McConnell (R-Ky.) challenged President Obama on Thursday to meet with Senate Republicans to hear firsthand about the political reality of passing tax increases through Congress.
A day after Obama challenged Republicans to give up special tax breaks for corporate jets and major oil companies, McConnell issued a challenge of his own on the Senate floor.
“I’d like to invite the president to come to the Capitol today to meet with Senate Republicans. Any time this afternoon if he’s available, to come on up to the Capitol,” McConnell said. “That way he can hear directly from Senate Republicans … why what he’s proposing will not pass.”
McConnell says once Obama learns from GOP lawmakers that ending special tax breaks for oil companies and wealthy families has no chance of passing the Senate, “we can start talking about — maybe, finally — start talking about what’s actually possible.”
Let me summarize the message McConnell announced this morning: “If the president has some free time in a few hours, he should stop by and listen to us tell him we want to lower the deficit, but only in ways we see fit.”
Soon after, White House Press Secretary Jay Carney told reporters the president need not hear Republicans “restate their maximalist position,” adding, “We know that position. That’s not a conversation worth having.”
Of course not. Everyone knows what everyone thinks and everyone’s position at this point. Obama doesn’t need to listen to Republicans demand 100% of what they want, anymore than McConnell needs to listen to Democrats tell him he can’t get 100% of what he wants.
This entire process made a right turn at farcical quite a while ago. Mitch McConnell isn’t just threatening to crash the economy, he’s also threatening to make mockery of the institution he claims to serve and turn the American political process into a reality-show circus.
Not to be outdone, NRSC Chairman John Cornyn (R-Texas) said President Obama has “diminished” his office by urging lawmakers to do their duty. If anyone explain what on earth Cornyn was blabbering about, I’m all ears.
And then there’s Sen. John Thune (S.D.), the chairman of the Senate Republican Policy Committee, who told Fox News this morning that the president goes golfing too much.
These aren’t random House backbenchers — McConnell, Cornyn, and Thune are three of the top four highest-ranking Republican members of the Senate. And they all appear to be rambling incoherently.
I was about to type that there are no adults left in the Republicans’ room, but that’s not entirely true. There are still a couple left, but they’re stuck in primary fights, so they have to go along with the madness to save their careers.
It’s a pathetic display.
By: Steve Benen, Contributing Writer, Political Animal, The Washington Monthly, June 30, 2011
Democrats Must Be Adults As GOP Redefines ‘Tax Increase’
OK, this isn’t exactly asking what the meaning of “is,” “is,” but it is close.
What is a tax increase? Is it letting a previous, temporary tax cut expire and go back to the earlier tax? Is it the “closing of a loophole” to remove a favorable tax break put in place for a specific industry? Is it the imposition of a fee or the increase in a fee? Is it really anything that results in an increase in revenue?
We can go on and on here, but what we are really talking about is not an esoteric debate. If you listen to Republicans right now, particularly Rep. Eric Cantor, who picked up his marbles and went home from White House negotiations, you would think that everything is a “tax increase.”
The sad aspect of the current debate is that what many Republicans are espousing is that added revenue should be “off the table.” This is clearly a nonstarter for truly solving our problems.
It also is inflexible and holds to the absurd notion that taxes can never go up; they can only go down. That sort of reminds me of: Housing prices can only go up; they don’t go down! Hmmm…
Democrats, to be honest, have to be the responsible party when it comes to providing balance to the cuts/revenue equation. They need not fear the boogeyman crying “tax raiser!”
Americans, by large majorities, understand that the richest 2 percent of their fellow citizens have seen rapid and large increases in their wealth of late, and asking them to pay their fair share is a no brainer. Americans understand that providing huge tax breaks to oil companies already making huge profits makes no sense. Americans understand that rewarding companies for parking their profits overseas or exporting jobs is untenable, and such behavior should not entitle them to special tax “incentives.”
In short, most Americans know that adequate revenue is part of the critical balance that will create and keep jobs as well as attack our debt problem. It is not about eviscerating government and tearing apart our social fabric. Republicans as conservative as Ronald Reagan have known the meaning of a tax increase and have not hesitated to use it.
By: Peter Fenn, U. S. News and World Report, June 27, 2011
Taxpayer Protection Pledge And The Grover Norquist Ethanol Trap
Tom Coburn has sprung a plan to force the Senate to vote on the ethanol subsidy:
Sen. Tom Coburn has pulled the trigger and is forcing a long-sought vote on an amendment repealing billions in annual tax incentives for ethanol.
The Senate will vote Tuesday afternoon on Coburn’s motion limiting debate on his amendment that would do away with the 45 cent blender tax credit for ethanol — worth about $6 billion this year — and the 54 cent tariff on imported ethanol.
Wait, don’t go to sleep, there’s something going on here. The press coverage doesn’t say so, but this is actually not about ethanol. It’s about Republican anti-tax dogma.
I wrote about this a few months ago, but for those readers who haven’t committed my blog to memory — shame on you! — I’ll refresh. Nearly all Republicans have signed a Taxpayer Protection Pledge, which is enforced by Grover Norquist. The pledge forbids the signer from approving any increase in tax revenue under any circumstances whatsoever.
Coburn and a handful of Republicans are trying to get around this pledge. Their tactic is to negotiate revenue increases that take the form of closing loopholes and exemptions rather than raising rates. This would clearly violate the Pledge. But Coburn is trying to expose the silliness of the Pledge. He’s holding a vote on eliminating the ethanol subsidy. Now, conservatives oppose the ethanol subsidy. But since the subsidy is a tax credit, then eliminating it is a tax increase, and forbidden by the Pledge.
So Coburn’s goal here is to drive a wedge between conservative doctrine and Norquist’s anti-tax dogma. If Norquist opposes a vote against ethanol, he reveals how absurd his pledge actually is. If he supports it, then he proves that it shouldn’t be taken literally. Either way, it creates a talking point that Republicans could use to support revenue increases. And since the GOP’s theological opposition to revenue increases has been driving budget policy for more than two decades, this is a pretty important development.
By: Jonathan Chait, The New Republic, June 10, 2011
Why I Support “The Ronald Reagan Tax Reform Act of 2011”
Ten years ago today, the wealthiest Americans caught a multi-billion dollar break from their benefactor, then-president George W. Bush. In the decade since, through two wars, natural disasters, a plummeting economy and a soaring debt, the wealthiest Americans have gotten to keep those Bush tax cuts. Happy birthday, everybody!
As the Republican Party now lines itself up behind Rep. Paul Ryan on his mission to cut the resulting deficit on the backs of working people and the elderly, I find myself surprisingly and strangely nostalgic for another GOP hero, whose legacy, at least when it comes to taxes, has become woefully misunderstood. Can it be that I find myself nostalgic for Ronald Reagan?!
Of course, I’m not alone in my nostalgia. I’m joined by the entire Republican leadership in this, but I think our reasons may be quite a bit different. In the spirit of unity, I’d like to suggest to Republicans in Congress that they look closely at the record of their favorite 20th century hero and adopt yet another policy named after the Gipper. I’m no fan of much of President Reagan’s legacy, but in a new spirit of bipartisanship, and historical accuracy, I’d like to present Republicans in Congress with an idea: the Ronald Reagan Tax Reform Act of 2011.
A key element of the Reagan lore believed by today’s GOP is that Reagan’s embrace of “trickle-down economics” is what caused any and all economic growth since the 1980s. In fact, after Reagan implemented his initial tax-slashing plan in 1981, the federal budget deficit started to rapidly balloon. Reagan and his economic advisers were forced to scramble and raised corporate taxes to calm the deficit expansion and stop the economy from spiraling downward. Between 1982 and 1984, Reagan implemented four tax hikes. In 1986, his Tax Reform Act imposed the largest corporate tax increase in U.S. history. The GDP growth and higher tax revenues enjoyed in the later years of the Reagan presidency were in part because of his willingness to compromise on his early supply-side idolatry.
The corporate tax increases that Reagan implemented — under the more palatable guise of “tax reform” — bear another lesson for Republicans. The vast majority of the current Republican Congress has signed on to a pledge peddled by anti-tax purist Grover Norquist, which beholds them to not raise any income taxes by any amount under any circumstances, or to bring in new revenue by closing loopholes. This pledge, which Rep. Ryan’s budget loyally adheres to, in effect freezes tax policy in time — preserving not only Bush’s massive and supposedly temporary tax cuts for the wealthiest Americans, but also a vast mishmash of tax breaks and loopholes for specific industries won by well-funded lobbyists.
The problem has become so great that many giant American corporations have become so adept at exploiting loopholes in the tax code that they paid no federal income taxes at all last year — if Republicans in Congress follow their pledge to Norquist, they won’t be able to close a single one of the loopholes that are allowing corporations to avoid paying their fair share.
Even Reagan recognized the difference between just plain raising taxes and simplifying the tax code to cut out loopholes that subsidize corporations. In 1984, he arranged to bring in $50 billion over three years, mainly by closing these loopholes. His 1986 reform act not only included $120 billion in tax hikes for corporations over five years, it also closed $300 billion worth of corporate loopholes.
These kinds of tax simplification solutions are available for Congress if they want them. As I wrote in April, nixing Bush’s tax cut’s for the wealthiest Americans would help the country cut roughly $65 billion off the deficit in this year alone. Closing loopholes that allow corporations to shelter their income in foreign banks would bring in $6.9 billion. Eliminating the massive tax breaks now enjoyed by oil and gas companies would yield $2.6 billion to help pay the nation’s bills.
But before Republicans in Congress change their math, they have to change their rhetoric — and embrace the reality of the economic situation they face and the one that they’d like to think they’re copying. In 1986, during the signing ceremony for the Tax Reform Act, Reagan explained that “vanishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share.”
It’s time for the GOP to take a page from their hero’s playbook. If they do so, they might be able to find some allies that they never thought possible. It’s time for “everybody and every corporation to pay their fair share.” We can all get along. Sign me up for “The Reagan Tax Reform Act of 2011.”
By: Michael B. Keegan, President, People For The American Way, Published in Huffington Post Politics, June 7, 2011
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