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Of Course the Norquist/GOP Story Was Bunk, Cont’d

I don’t feel like it needs to be reiterated from earlier today, but this flood of commentary about whether Republicans announced a trial separation from Grover Norquist was so overblown. And Saxby Chambliss, seen as the poster child for this separation (even though he’s been discussing a Gang of Eight deal that would increase tax revenue for the last two years), put a nail in the heart of the coverage this afternoon.

Sen. Saxby Chambliss (R-Ga.) stressed over Twitter on Monday that he supports tax reform that lowers tax rates, not tax increases.

I’m not in favor of tax increases. I’m in favor of significant tax reform 2 lower tax rates & generate additional revenue through job growth

This is the general deal that every Republican can support, and snooker the political press into thinking that it’s a concession. It’s based on “dynamic scoring” and the idea that lower tax rates can equal higher revenue. It’s the most outlandish of a series of mathematically challenged ideas for raising revenue. Just saying “I support additional tax revenue” means approximately nothing without the context of how you plan to do it.

The difference is between “reforming” the tax code through changing deductions or other loopholes and adjusting the rates first and building tax reform on top of it, the White House’s view.

But the real difference is between this obsession with tax rates, and the legitimate and natural obsession with stimulating economic recovery. The reason the Norquist-GOP story was so overhyped is that, in a Washington wired for conservatives, the psychodrama between some lobbyist and a bunch of politicians over tax rates becomes the ultimate in political importance, rather than the single mother in Ohio struggling to patch together two jobs into a salary to provide for her family. Tax rates aren’t even the single or most important part of the fiscal slope or the grand bargain that may ensue from it. But in Washington, it’s all about taxes because it’s seen as prefatory to a “deal.” No such “deal” gets made to juice the economy. And no other crisis gets manufactured because it doesn’t align with the real goals of the elites in Washington.

So let’s step back for a minute, and consider what’s going on here. For years, deficit scolds have held Washington in thrall with warnings of an imminent debt crisis, even though investors, who continue to buy U.S. bonds, clearly believe that such a crisis won’t happen; economic analysis says that such a crisis can’t happen; and the historical record shows no examples bearing any resemblance to our current situation in which such a crisis actually did happen.

If you ask me, it’s time for Washington to stop worrying about this phantom menace — and to stop listening to the people who have been peddling this scare story in an attempt to get their way.

Right. The Norquist-GOP battle keeps the focus on the deficit and debt issues, and lets liberals buy into this notion that they may “win” the battle through a modest increase in top marginal tax rates or something similar. In reality, we still have high unemployment and a large capacity to borrow. No DC dramas have been put together to tell that story.

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David Dayen

David Dayen