The fiscal cliff can’t come at a worse time for the Republican Party. Only once in the last six presidential elections has the party broke the 50% mark. It now appears that the GOP maybe topping off its support in a national election at the ironic number of 47%, which is what Mitt Romney received in the popular vote.
While various factions in the GOP debate whether to moderate, retrench with the base or just find better candidates to message the platform, the immediate challenge is how to handle taxes. In particular, the Grover Norquist pledge that nearly every Republican in Congress has taken. The pledge binds the Congressmember to not vote to raise taxes.
Norquist has held conservative Congressmembers to the pledge with only a rare defection. Those who dared defect faced an intraparty challenge funded by Norquist when they came before the voters. That pledge is beginning to show its cracks as some begin to look for an out from Norquist’s grip so that they can use flexibility to deal with the nation’s financial problems. Driving the desire to wiggle free of the pledge is the realization that if a deal is not made in the coming weeks, voters will blame Republicans over Barack Obama, 53% to 29%.
New York Rep. Peter King took the view that many Representatives and Senators are considering:
“A pledge you signed 20 years ago, 18 years ago, is for that Congress,” King said. “For instance, if I were in Congress in 1941, I would have signed the declaration of war against Japan. I’m not going to attack Japan today. The world has changed. The economic situation is different.”
On CNN’s “Starting Point with Soledad O’Brien,” Norquist rejected King’s interpretation:
“Peter King knows full well the pledge he signed, and others have signed, it’s for while you’re in Congress, it’s not for a two-year period.”
Norquist can extract that but to think that he is going to keep half of Congress to a non-binding, purely political affirmation for the rest of their time in Congress is almost naïve. It doesn’t matter how important or proper a pledge is, survival in politics requires compromise and shifting strategies. Norquist seems genuinely baffled by that. Norquist is only relevant to these members of Congress as long as he strikes fear in their reelection chances.
Senators like Lindsey Graham and Saxby Chambliss have lost that fear and stepped away from the pledge. Now Tennessee Sen. Bob Corker can be added to that list. Corker noted that he sought voter approval to no longer be obligated to the pledge.
“Well, I’m not obligated on the pledge. I made Tennesseans aware, I was just elected, that the only thing I’m honoring is the oath I take when I’m sworn in this January,” Corker said on “CBS This Morning.”
Corker’s right and right at the approach he took. Norquist has gone after Congressmembers who took the pledge, broke it, and then ran for reelection. He will probably go after Corker too, but Corker can say that he disavowed the pledge and won reelection based on that. That won’t make a difference to Norquist. It may make a difference to the voters.
The division in the GOP is significant. It is what will keep the country from going off the fiscal cliff. Only a few Republicans are needed to defect to the Democratic position of higher taxes. Those Republicans will possess tremendous leverage, far more than the Norquist Republicans who will sit on the sidelines in a pout of denial.
The Republicans willing to compromise will probably give in to the Democratic demands for higher taxes for wealthier Americans, but their price will probably be to raise that tax level above $250,000.
Both sides will make a deal, more than the Republicans want to give, but less than the Democrats seek. The impact will be minor on the budget because the tax increase is not significant and neither is the number of people. The outcome with higher taxes will be largely symbolic because it will ignore what Warren Buffet recently wrote in the New York Times:
Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.
Now no one is seriously promoting bringing back a 91% rate, but the simple fact is that more revenue is going to be needed than what the deal a the end of the year will provide. It is no coincidence that during past years of higher taxes, the economy boomed, living standards rose and the government balanced its books. This was because, as Buffet mentions, no one skipped a chance to make money because they had to pay more in taxes.
Whatever deal emerges from Washington, it is sure to sting Norquist. He will be the loser. In the long run, that means Congress might be able to learn to compromise again and really get some things done. Only then, as Corker said, can we enjoy the benefits of a Congress where the only pledge is “the oath I take when I’m sworn in this January.”