The Tea Party, Taxes and Spending Cuts?
A key goal of the Tea Party movement is the reduction of the national debt and thus the size of government via spending cuts. However, it is highly unlikely that the federal deficit can be reduced through spending cuts alone. That said if the Tea Party movement harbors such a fundamental opposition to tax increases and revenue enhancements and those measures are required in order to effect the deficit reduction they hope to achieve, how can the movement can ever hope to be successful.
It was a perquisite that those seeking Tea Party support in the 2010 elections for the House and Senate sign a statement stating that they would never raise taxes or eliminate tax breaks in attempt to reduce the federal deficit. This may prove a pledge that cannot be kept for those who ultimately want to lower the deficit. Two of the three major deficit reduction panels, the National Commission on Fiscal Responsibility and Reform, co-chaired by, Republican Alan Simpson and Democrat Erskine Bowles, and the Bipartisan Policy Center’s Debt Reduction Task Force, co-chaired by former CBO Director Alice Rivlin and retired Senator Pete Domenici (R-NM), have both included revenue enhancements as part of deficit reduction. Quoting political reporter Jackie Calmes: “The sponsors of the plans say that the scale of the nation’s fiscal problem is too great to resolve without both raising taxes and cutting projected spending on Medicare, Medicaid and Social Security, all popular entitlement programs.” It is these recommendations that are at the center of the bipartisan discussion currently underway in the Senate. While those on the far right will continue to insist that the deficit can be reduced by spending cuts alone, the political reality is that the discussion in Washington has now moved beyond that argument and the facts reveal that there is some degree of bipartisan support for revenue enhancements in any deficit reduction package.
A growing minority within the G.O.P. is also making the case that the projected debt is too big to handle simply by cutting spending. In the run up to the 2010 elections, Saxby Chambliss (R-GA) observed: “Everything has got to be on the table for discussion… “there are a lot of things people are going to have to be educated about, on the spending side as well as the revenue side.” Chambliss is now one of the “Gang of Six” senators involved in negotiations as to how to implement the deficit reduction panel’s proposals. Since the panels findings have made it into the discussion on deficit reduction, Chambliss stated, “We’ve got to have an increase in revenues to be able to retire this debt.” Chambliss appearing on CNN in April said, “Now, if we don’t want to pay the debt back, then we could just not worry about the revenues. But the fact is we’ve got a $14 trillion debt staring us in the face, and revenues have to be on the table if we’re serious about attacking that debt.” Tom Coburn (R-OK), who had been a “Gang of Six” member, has parted company with those who rule out revenue enhancements. Appearing on Meet the Press in April Coburn said that increasing revenues may be required in order to address the deficit issue and in an NPR piece, he indicated that the solution to the deficit problem may involve tax increases. Coburn’s stance has touched off an internecine feud within the ranks of conservatives as well. Grover Norquist of the Americans for Tax Reform, the creators of the anti-tax pledge, criticized Coburn on his change of heart as it relates to tax increases. Coburn in responding to a question on Meet the Press has in turn dismissed Norquist and his organization as being nothing more than just another anti-tax lobbying group: “Which pledge is most important, David, The pledge to uphold your oath to the Constitution of the United States? Or a pledge from a special interest group who claims to speak for all of American conservatives, when in fact they really don’t?”
Now, even though he seems to have temporarily left the Gang of Six, Coburn continues to point to the need for revenue enhancements. To wit: “But look, realistically we cannot solve our problems unless we generate growth in this country, and the only way we’re going to do that is back off on a lot of regulations, create a tax structure that’s going to cause investment to happen, and get dynamic returns that actually increase the revenues coming to the federal government. We can’t do it all by eliminating large sections and duplicate spending and waste. We can do a large portion of it, but there has to be some revenue component to that, and anybody that says that’s not the case, I think they’re just wrong and they’re not thinking about the long-term health of our country.” James Thurber, an expert on congressional affairs at American University points out: “It’s significant that both Chambliss and Coburn see increased revenues as part of the solution to chronic deficits… This is the beginning of a crack, which may allow for a deal, Thurber says. “Norquist will try to stop it, and it will be a major confrontation between the Republican senators and Norquist.” Thus while the hot rhetoric flies back and forth on the political street, in the chambers of the Senate, all manner of measures are being considered in deficit reduction strategy sessions.
It’s not only practical politicians on the right who have abandoned the idea that the deficit could be addressed by spending cuts alone, conservative sources outside the Beltway are weighing in on the need for revenue enhancements as well. Quoting David Stockman: “It is obvious that the nation’s desperate fiscal condition requires higher taxes on the middle class, not just the richest 2 percent. Likewise, entitlement reform requires means-testing the giant Social Security and Medicare programs, not merely squeezing the far smaller safety net in areas like Medicaid and food stamps.” The Wall Street Journal’s David Wessel pointed out that the ideas contained in Paul Ryan’s budget plans will actually lead to tax increases due to Ryan’s faulty math and unrealistic assumptions as to what can be done and how. In addition, the nonpartisan Tax Foundation makes the following observation: “Overall, this feed the beast question is the core question that conservatives must answer before taking a position on the role of tax hikes in solving the long-term budget problem. If feed the beast isn’t a problem at all, but you still hold deep to your no tax hike position so as to support fiscal insolvency which would trigger enormous tax hikes, your position is so illogical that you don’t deserve to be part of the debate.” Martin Feldstein, former Reagan Economic Advisor, made the following observation, “Reducing the budget deficit and stopping the explosion of our national debt will require more tax revenue as well as reduced government spending. But the need for more revenue needn’t mean higher tax rates. As the bipartisan fiscal commission appointed by President Obamastressed last year tax revenues can be increased substantially by limiting the deductions, credits and exclusions that are essentially government spending by another name.” Likewise, even the conservative National Journal says that revenue increases have to realistically be on the table.
Are there still those among the newly elected Tea Party caucuses that are insisting on reducing the national debt and the size of government but spending cuts alone, of course there are but their actual influence is now hardly the force it was once thought to be. What is important to note is that these people will not have the final say in the ultimate policy outcome. I predict the scenario will play out as follows. The Tea Party Caucus in the House of Representatives will continue to clamor for drastic cuts in spending and no increase in taxes or revenues and Speaker Boehner will continue to parrot that line right up until the last minute upon which he will take his proposals to the Senate only to have them rejected. Thereafter, Boehner will return to the House, just as he did during the Continuing Resolution debates, where he will inform the Tea Party crowd that what they had hoped to accomplish is not in the cards politically. Like the situation related to the Continuing Resolution, the final product will be the result of compromise not political extremism and that compromise will be tempered by the fact that the Democrats control the Senate and Obama wields the veto pen. Thus, the only choice that the House Tea Party Caucus will have available to it will be a solution that is quite different from the philosophy of its core beliefs. The ultimate result will be that those who came to Washington with the idea that they could reduce the deficit and size of government by spending cuts alone will be in for a rude awakening sooner rather than later. There is no way that can be seen as good news for the Tea Party. After all, if you cannot come through on one of the single most important planks in your platform, what can you do? Therein lies what could be the single greatest threat to the continued existence of the Tea Party. If you cannot even remotely accomplish that which you set out to achieve, why would anyone continue to be attracted to your core philosophy or vote for your candidates? Hence, the ultimate fallout from this great debate before us on raising the national debt limit and the concomitant discussions related to taxes and spending may very well be the end of the beginning for the Tea Party movement as a force in American politics.