General Giap and the GOP

Responding to Republican calls for a broad fiscal "dialogue" under the double threat of government shutdown and looming debt ceiling, the Times editorial board reacts with commendable incredulity -- but salts in, I think, a misconception (my emphasis):

This is a moment for immediate action to reopen government’s doors, not the beginning of a conversation that Republicans spurned when they lacked the leverage of a shutdown. They have refused to negotiate over the Senate’s budget, they have refused to negotiate over the president’s budget, and they have refused to negotiate to make the health law more efficient, insisting only on its demise. 

 The shutdown does not increase Republican leverage -- it erodes it.  Grover Norquist understands this:

We are the 34%!

who "like" or "love" doing our taxes, according to Pew:

When asked why they like doing their income taxes, 29% say that they are getting a refund, while 17% say they just don’t mind it or they are good at it; 13% say doing their taxes gives them a sense of control, while the same percentage cites a feeling of obligation – that it is their duty to pay their fair share.

"Like" is a bit strong for me. But I do get some satisfaction out of the process, disfigured a bit by anxiety over the possibility of owing more money than I thought (I pay quarterly estimates).  Here's what I do like:

Who's more scared of the sequester?

Since the limited fiscal cliff deal was struck, there's naturally been a ton of speculation whether the Republicans will indulge in a fresh round of debt ceiling terrorism when the treasury reaches the end of its rope in a couple of months, and whether Obama will blink if they do.

In a Wall Street Journal interview, John Boehner indicated that the debt ceiling may play more of a support role, and that the sequestered spending cuts postponed for just two months by the Jan. 1 agreement are the GOP's main source of leverage. Here's how he sketched out his alleged negotiating strategy, as recounted by the WSJ's Stephen Moore:

The real showdown will be on the debt ceiling and the spending sequester in March. I ask Mr. Boehner if he will take the debt-ceiling talks to the brink—risking a government shutdown and debt downgrade from the credit agencies—given that it didn't work in 2011 and President Obama has said he won't bargain on the matter.

The debt bill is "one point of leverage," Mr. Boehner says, but he also hedges, noting that it is "not the ultimate leverage." He says that Republicans won't back down from the so-called Boehner rule: that every dollar of raising the debt ceiling will require one dollar of spending cuts over the next 10 years. Rather than forcing a deal, the insistence may result in a series of monthly debt-ceiling increases.

The Republicans' stronger card, Mr. Boehner believes, will be the automatic spending sequester trigger that trims all discretionary programs—defense and domestic. It now appears that the president made a severe political miscalculation when he came up with the sequester idea in 2011.

If loophole closures are benefit cuts, are benefit cuts tax hikes?

Eduardo Porter suggests that raising new tax revenue by cutting loopholes opens up a semantic loophole:

Though the offer to raise money by closing loopholes has a bipartisan pedigree — based on a plan proposed last year by the Democrat Erskine Bowles and the Republican Alan Simpson, the chairmen of President Obama’s deficit commission — it relies on rhetorical sleight of hand. If tax breaks are equivalent to government spending, eliminating them is equivalent to spending cuts. Mr. Boehner’s offer to do away with tax breaks in exchange for cutting entitlements raises no new revenue. It amounts to cutting spending twice.

Porter goes on to point out that a) Democrats have opened many "loopholes" for the poor and middle class because it's often the only form of social spending that Republicans will allow, but b) on balance, tax deductions disproportionately benefit the wealthy. His main point: we should consider each break on its merits, not make a shibboleth out of closing out as many as possible.

I would add a couple of wrinkles. First, Republicans are conflicted about whether to regard tax breaks for the nonwealthy as spending or tax cuts.  On the one hand, they've not only acceded to Democrat-initiated lower-income tax breaks, but sweetened their own wealthy-tilted tax cut goodies by cutting taxes and expanding loopholes for the nonwealthy as well.  On the other hand, they've come to regret the low-end largess, as all that bitching about the 47%, the lucky duckies who pay no income taxes, demonstrates.

Second, if Republicans are pulling the wool over by treating loophole closures as tax hikes, they've got themselves fooled as well.  When such tax "increases" were being bruited in the debt ceiling negotiations of 2011, Tom Coburn and others struggling to wriggle out of Grover Norquist's embrace experimented with casting  loophole closures (e.g., the ethanol subsidy) as "spending cuts."  It didn't fly; Norquist screamed that any phased out tax break would have to be offset by another tax break, and the GOP fell in line.

Writhing out of Norquist's embrace, Part V

Here we go again: Senator Saxby Chambliss, R-Georgia, one of the Quixotes of the Senate Gang of Six, is writhing out of Grover Norquist's embrace, almost exactly as in March 2011 when the Gang first got in gear to try to reincarnate, or rather fully incarnate, Bowles-Simpson.*  In this iteration, Chambliss says, "I care more about my country than I do about a 20 year-old pledge"; Norquist shoots back that Chambliss's oath is to the people of Georgia, not to him. Then Norquist revives a nonsense claim from the prior round:

Norquist also highlighted a letter Chambliss signed with fellow Gang of Six members Mike Crapo of Idaho and Tom Coburn of Oklahoma where the three said they hoped for a plan with “lower individual and corporate tax rates for all Americans.”

A boring white guy will (counter)balance Romney's ticket

Jonathan Chait points out today that Romney's veep pick will tell us whether he's decided his campaign needs a game-changer (ethnic! female! ideologue!) or whether he remains confident that hammering Obama for a limping economy will be enough, in which case the pick will be the "boring white guy" the campaign hinted at in May.

I am of the James Fallows school of Romney campaign advisers.  Romney, Fallows suggests, should stick to one message:

• The economy is broken;
• Obama can't fix it;
• I can.

Of course, Romney's formula has also required hiding the fixin' prescription. And that's where the veep choice will represent a crossroads. "Boring white guy" would not mean a neutral, neither-help-nor-hinder placemarker. He (not she) would help Romney continue to hide the ball.

The day American democracy died?

Here's a news snippet, as excerpted in Mike Allen's Playbook, that perhaps lays bare the arc of U.S. history since 1980. And it doesn't bend toward justice:

NINE-FIGURE DONATION TO ROMNEY? "Adelson's Pro-Romney Donations Will Be 'Limitless,' Could Top $100M," by Forbes' Steven Bertoni : "Sheldon Adelson, along with his wife Miriam, ... donated $10 million to the leading Super PAC supporting ... Mitt Romney-and that's just the tip of the iceberg. A well-placed source in the Adelson camp with direct knowledge of the casino billionaire's thinking says that further donations will be 'limitless.' Adelson, who has built Las Vegas Sands into an global casino empire, will do 'whatever it takes' to defeat Obama, this source says. And given that Adelson is worth $24.9 billion-and told Forbes in a recent rare interview about his political giving that he had been willing to donate as much as $100 million to his initial presidential preference, Newt Gingrich-that 'limitless' description telegraphs potential nine-digit support of Romney." http://onforb.es/KpzkDk

The "arc" has been sculpted by Republican-appointed Supreme Court justices who, beholden to an ideology that admits no distinction between money and speech, have literally sold American democracy down the river to the GOP's corporate and megarich individual backers.

GOP will damn the polls and maintain tax intransigence

Andrew Sullivan, who wanted Obama to come out strong for Bowles-Simpson and make a crusade of deficit reduction in his State of the Union address, now suggests that Obama do the same with tax reform, a linchpin of any viable deficit reduction plan. (That is, a revamping of the tax code that shrinks loopholes, lowers rates, and nets substantial new revenue.) In support, Sullivan cites a compendium of polls from Bruce Bartlett:

They all show heavy majorities (most in the mid-60s) in favor of raising taxes on the wealthy as part of a deficit reduction plan. Yet this is the one issue on which Republicans seem determined to take a stand. If the Democrats cannot marshall 2 - 1 support for their policies into actual legislation, they really need to pack it in as a viable party (although one could argue they packed it in years ago).

This would be true if we lived in a sane political environment, especially since Republicans will not be able to prevent the Bush tax cuts from expiring if Obama and the Democrats are willing to let them all expire.  Reversion to Clinton-era rates would raise an estimated $3.6 trillion over current rates in ten years -- as opposed to the $1-2 trillion Democrats would be able to extract through tax reform, would Republicans agree to any increase at all.

We do not, however, inhabit in a sane political political environment.  Consider:

Back to the future: Norquist's extortion

October 1, 1995.  Bob Dole, Senate majority leader and presidential candidate, is working to shepherd an omnibus spending bill incorporating the GOP's seven-year deficit reduction plan to passage, around the promised veto of Bill Clinton.  A marquee feature is $245 billion tax cuts, scaled down from the Contract with America's call for $354 billion but representing a consensus GOP figure since legislation took shape in the House and Senate in the spring of the year.  After months of Democratic attacks, however,a Washington Post poll finds  that 69 percent of respondents deemed "leaving Medicare services basically as they are now" to be more important that cutting taxes. Dole wavers:

"Will {the tax cut} be $245 billion? I'm not certain at this point," he said on CBS's "Face the Nation." "We have to get into the Finance Committee and see what we can achieve"(Washington Post, 10/3/95).

Heresy!  Up rears an enforcer all too familiar to those following the current budget battles in Washington:

A GOP oath best kept in the breaking?

Grover Norquist continues to insist loudly that Republicans violate his "no new taxes ever" pledge when they vote to close out any given tax loophole without instituting a fresh tax cut to offset the extra revenue. The response below is emotionally satisfying but misleading in one important regard:

“Grover is embarrassed that 34 Republicans essentially told him to take a hike [by voting to end the ethanol tax subsidy] and rejected his narrow and ridiculous interpretation of what the pledge means,” one aide says. “He’s made a calculation that this is an existential threat to his lobbying livelihood. That’s what this is about, one desperate lobbyist.”

The problem is, Norquist's "interpretation" of his tax pledge, which almost every Republican in the House and Senate has signed, is not "ridiculous." It's not even an interpretation.  He is simply holding the GOP to the letter of the pledge:

Coburn: ending the ethanol subsidy is (half?) a tax cut

I have been intrigued in the past to note that some conservatives characterize reductions in "tax expenditures" -- targeted tax breaks, such as for ethanol production or mortgage interest -- as "spending cuts" rather than as "tax hikes."  But Tom Coburn has gotten even more creative. Yesterday, Coburn won the support of 34 GOP senators for an amendment that would end the ethanol subsidy -- a vote he staged as a refutation of Grover Norquist's insistence that every closed-out tax break has to be offset with an equal tax cut.  Last week, ratcheting up his months-long feud with Norquist, cast ending a wasteful tax subsidy like this:

Writhing out of Norquist's embrace, Part IV

You have to respect a conservative Republican who tells his colleagues that the only way they're going to get a deficit reduction deal is to raise tax revenue, no matter what contortions he has to twist himself into to cover himself.

Tom Coburn has separated himself from current GOP orthodoxy, and specifically from a fundamentalist interpretation of Grover Norquist's no-new-taxes pledge, by degrees.  Now, even as he withdraws (temporarily, he implies) from the Gang of Six purporting to negotiate a tax reform/deficit reduction deal, he's completed the clarification. And incidentally, effectively told Norquist to go fuck himself.

Is Obama his own Grover Norquist?

As David Brooks noted in the midst of the 2008 campaign, Obama has put himself in a box on taxes. Here's David Plouffe on Meet the Press today:

DAVID GREGORY:
--bring up taxes, though. Is-- in the President's plan as he envisions tackling the deficit, do taxes have to go up? Does that have to be part of this equation across the board?

DAVID PLOUFFE:
Well, this is part of his budget for next year. He has said he believes-- taxes on the higher income, people over $250,000-- should eventually go up.

Forget Ryan -- watch Coburn and Chambliss

For those who believe that Obama has failed a s test of courage by not rolling out a detailed tax reform/deficit reduction plan early this year, a thought experiment: had he done so, would Tom Coburn have said this on the Senate floor? (link is to Greg Sargent; emphasis is his.)

Well, the message for America today is every program’s going to get hit. The Defense Department’s going to get hit, every program’s going to get hit. My taxes are going to go up. Sorry, they’re going to go up. This country cannot get out of this mess with the behavior that we’re exhibiting in this body, and if we fail to do what is necessary for our country at this critical time in our juncture, history will deem us absolutely incompetent. With that, I yield the floor.Maybe...I admit that the thought experiment yields no clear results.  But if Obama and Dems really do want a tax reform/deficit reduction deal, it's Coburn Chambliss & Crapo who are carrying the ball. Because this can't happen unless Republicans sign on to tax reform that raises revenues.  Which is almost to say that it can't happen, period.

The sine qua non for a bipartisan long-range budget deal is for Republicans to acknowledge that taxes will have to be raised, albeit as part of a deal that lowers marginal rates while drastically reducing targeted tax breaks. The bipartisan Senate Gang of Six currently negotiating the outlines of a deal is allegedly using the Bowles-Simpson plan as a baseline. While Bowles-Simpson was  criticized from the left for achieving too high a percentage of its projected deficit reduction from spending cuts (two thirds) as opposed to taxes (one third), the plan did envision raising Federal revenue by about $1 trillion over nine years.  Grover Norquist, meanwhile, is waving his bloody-sheet "no tax increases" pledge, signed by (he claims) 95% of House and 87% of Senate Republicans.

Can a president reduce partisan division?

Repetition, repetition, repetition.  In trying to discern Obama's intentions and strategy regarding long term tax/budget reform, I have referred repeatedly (1, 2, 3, 4, 5) to Frances E. Lee's demonstration that presidential advocacy on a given issue, particularly when put forward in the SOTU, increases partisan division on that issue.  While the theory makes intuitive sense, and is demonstrated in Lee's Beyond Ideology: Politics, Principles and Parisanship in the U.S. Senate by thorough statistical analysis of roll-call votes from 1981--2004, one caveat is in order. Tax policy is already so polarized by party that there's not that much room for a President to worsen the division:

Presidential involvement has little influence on partisanship on votes dealing with social issues and the distribution of the tax burden...These are clearly party-defining issues regardless of whether a president demands action on them. Generally speaking, taxes and abortion sparked partisan division in the Senate at approximately the same levels regardless of their presidential agenda status (p. 83).

According to Lee's tabulations, party division on Senate roll call votes from 1981-2004 concerning distribution of the tax burden was 66 overall, and 71 on tax legislation in which "presidential leadership" was exerted. That's in contrast to nonideological issues, where party differences are relatively small until a president advocates a specific policy, at which point the parties usually divide. Partisan division on votes concerning space, science and technology, for example, averages 30.5 points higher on votes over legislation on which the president has exerted leadership than on votes on which he has not.

One might conclude that in the pre-polarized tax/spending arena, the president has little to lose by drawing the battle lines clearly and fighting it out in the arena of public opinion.  Why shouldn't Obama lay out a tax/deficit plan somewhere left of the Bowles-Simpson plan and throw his energy into hammering the devastation to be wrought by the GOP's wholly unnecessary cuts to discretionary domestic spending -- and to the decimation of Medicare and Social Security required by the "no new taxes" pledge that over 90% of Congressional Republicans have signed? What's he got to lose?

Writhing out of Norquist's embrace, part III

Grover Norquist is insisting on his bond with the trio of conservative Senators that have begun negotiations on a comprehensive tax/budget reform deal. But Chambliss/Coburn/Crapo are looking for a "pound of flesh/not one drop of blood" loophole.

Shakespeare's merchant had a perfect legal right to claim a pound of flesh from Antonio, who had pledged it to him if he could not repay his debt on time. But Shylock, it was decreed in court,  had no more right than anyone else to shed blood.

In the past two days, Chambliss and Coburn have argued, in effect, that while they promised never to raise taxes, they did not promise to reduce the United States to insolvency. To reduce the deficit to a manageable level, "“We’ve got to close the revenue gap," as Chambliss put it on Monday. 

First, though, they've got to close the rhetoric gap, embodied in Norquist's no-new-taxes pledge. To recap: when reports broke that the conservative 3Cs were working with three Democratic counterpart on a bipartisan budget deal that would include some combination of spending cuts and revenue increases, Norquist sent an open letter reminding them of their pledge never to raise taxes. As I noted at the time,  CCC's carefully-worded response promised to lower marginal rates but most pointedly did not promise that offsetting those reductions by closing or reducing various tax breaks would not result in a net increase in revenue. The letter pitted the "special interests" who would lose tax breaks in an imagined future deal against  the 'taxpayers' whom they were pledged to protect. What it did not note is that most of us are both (see: Chambliss, Coburn, Crapo to Norquist: Kowtow or brush-off?)

Saxby Chambliss seizes the freedom to acknowledge that 2+2 = 4

When the Wall Street Journal reported that a new Senate gang of six was beginning negotiations toward a comprehensive tax/budget reform deal, Grover Norquist put the screws to the Republican half of the gang, publicly reminding Saxby Chambliss, Tom Coburn, and Mike Crapo of their pledge not to raise taxes.  I noted at the time that the trio's carefully worded response letter seemed to leave the door open to tax reform that, lowering marginal rates while closing loopholes, would raise revenues as a percentage of GDP:

Chambliss et al may defend me as a "taxpayer" while clobbering me as a "special interest" (mortgagee, donor).

Now Chambliss has embarked on a bipartisan roadshow with Sen. Mark Warner of Virginia. According to the New York Times, he is unequivocal: taxes must be raised.

While Republicans are adamantly antitax, Mr. Chambliss said, “We’ve got to close the revenue gap.” 

And, breaking another GOP taboo:

A questioner pointed out the importance of military spending in Virginia, home to the Pentagon, bases and shipbuilding, but Mr. Warner and Mr. Chambliss agreed that it must be cut, too.

Chambliss, Coburn, Crapo to Norquist: kowtow or brush-off?

No question, Ramesh Ponnuru is far more attuned than I will ever be to linguistic code of true-blue GOP supply siders. So perhaps I should accept at face value his report (via Sullivan) of this little tax-pledge tango between Grover Norquist and the Republican half of the new Senate gang of six currently in early-stage discussions of a comprehensive tax reform/deficit reduction deal:

After yesterday’s Wall Street Journal reported on work toward a bipartisan deal on the budget, Grover Norquist of Americans for Tax Reform sent three Republican senators a letter noting that the deal, as outlined in the Journal article, would violate their pledge not to raise taxes. The response letter from Senators Chambliss, Coburn, and Crapo strongly suggests that the senators will not support a deal that raises taxes on net. Instead they want a bill that raises revenue only by increasing economic growth.

If you read the letter, though (link above), you might wonder whether Chambliss et al have really promised not to raise taxes "on net."  They do say that the Journal article, which reported that the six were contemplating an (apparently erroneously low) boost in tax revenues, should not be taken at face value. They do intone,  "Like you, we believe that tax hikes will hinder, not promote, economic growth." And they do plead that "we do not believe that our efforts to avert tax increases on hardworking Americans violates any pledge we have taken..." Of course not!  But...