Economy & Budget

Norquist: Take ‘fiscal cliff’ deal

Norquist: Take 'fiscal cliff' deal
Grover G. Norquist

The leader of the tax advocacy group that promotes the “Taxpayer Protection Pledge” between candidates and the voters told Human Events Jan. 1 he supports the fiscal cliff compromise.

“The smart D’s are angry and the smart R’s are happy—that should tell you something,” said Grover G. Norquist, the founding president of the Washington-based Americans for Tax Reform.

All tax and spending bills must originate in the House. Because the bill the Senate passed Jan. 1 was an unrelated House-passed bill that was gutted and replaced with the compromise languange, the House must pass the bill again with the new Senate language before it goes to the White House.

President Barack Obama told reporters he supports the deal, too.

“The president is going around telling everyone: ‘I won, I won,’ good, I hope he really thinks that,” he said.

The Dec. 31 compromise fashioned by Senate Minority Leader A. Mitchell McConnell Jr., (R.-Ky.) and Vice-President Joseph R. Biden Jr., who joined the negotiations at McConnell’s request, extends the current tax code regime for households with income more than $450,000 and individuals earning more than $400,000.

The current tax regime reflects changes made under President George W. Bush, and the new tax rate for those over the threshold will be 39.6 percent, the top rate on Jan. 20, 2001, President William J. Clinton’s last day in office.

The compromise bill passed the Senate at or around 2 a.m. Jan. 1 and also postpones the automatic budget cuts for two months, among other provisions.

“This makes about 84 percent of the Bush tax cuts permanent, which means they are no longer threatened,” he said. “One of the problems we had is that they kept coming back, two years ago, and now, they threaten not to continue the tax cuts—the ones they made permanent are now off the table.”

The so-called “Bush tax cuts” are a collection of changes to the federal tax regime, many that passed with “sunset” provisions forcing Congress to allow them to expire, or allow taxes to go up upon the expiration of the cuts.

Norquist said the Republicans made a huge mistake when it did not fight for permanent changes to the tax code and settles for the temporary victory with sunsets.

“I wish the Bush people had been smart enough to extend everything for 10 years back in 2005, when they had control of everything, but they didn’t, so it ended up lapsing, but now at least we have the opportunity to focus on the spending,” he said.

No Republicans said they are in favor of raising taxes, but because of the sunsetting tax cuts, if they did nothing taxes would go up on everyone.

Democrats who voted against the Bush tax cuts and campaigned for letting them all expire gave up one of their major rhetoric rallying points, he said. “They have fallen on their sword.”

Senate Minority Leader Sen. A. Mitchell McConnell Jr. (R.-Ky.)

Senate Minority Leader Sen. A. Mitchell McConnell Jr. (R.-Ky.)

Politically, the McConnell-Biden compromise changes the political dynamic in favor of the Republicans in two ways, he said.

First, by taking taxes off the table, President Barack Obama no longer accuse Republicans of opposing a “balanced approach,” in which to him meant tax increases and pseudo-spending cuts, he said.

As long as the Republicans would not address the reality of expiring tax cuts, the president dodged criticism for opposing spending cuts, he said. “It will be a clean fight now.”

“He didn’t want balance, he wanted tax increase with no spending cuts,” he said.

“We have take that mask off him—and that is very helpful,” he said.

“It exposes everything he said as a lie,” he said.

“Remember when he said he wanted some grand bargain? He said he wanted $4 trillion budget cuts reduction—but the spending cuts were all phoney?” he asked.

Obama’s spending cuts use faulty math, he said.

“You know, $1 trillion of his savings is from the Budget Control Act, it’s already in the law and he wants to count that again,” he said. The Budget Control Act passed in August 2011 and is the legislation that created the fiscal cliff.

“Another trillion comes from un-occupying Iraq and Afghanistan for the next 10 years,” he said. “Well, since we’ve been kicked out of both of the countries and nobody expected us to stay there forever—it’s like counting the expenses for the War of 1812 as not continuing as a budget cut,” he said.

Norquist said the rest of the president’s cuts were also phony.

During the last year, the president complained that Republicans would not accept deals with $10 in cuts for $1 in spending cuts, so it was not his fault that during his presidency there was no effort to lower the federal government’s debt.

“What we now know is that 10-to-1 ratios were a joke, 3-to-1 ratios were a joke, Simpson-Bowles was a joke, the only way to get spending cuts are to fight for spending cuts—yet, when Republicans put tax increases on the table, the spending cuts disappear,” he said.

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President Barack Obama Dec. 17 with senior advisors in the Oval Office. (Official White House Photo by Pete Souza)

“We now fight on the spending issue on the next two to four years, which is the issue where we have the greatest level of support among Independents on,” Norquist said.

“Our tools are the debt ceiling increase and the continuing resolution—because the Democrats don’t do budgets,” he said. The last federal budget that passed the Democratic-controlled Senate was the Fiscal Year 2010 bill that the Senate passed April 29, 2009.

The Republican-controlled House can then passed continuing resolutions, short-term stop-gap spending and tax bills that govern the federal government when there is not official budget for the fiscal year, as long and as short as they want to increase their leverage with the Democrats to cut spending, he said.

The Democrats drew blood with the bill that passed the Senate, he said.

“But, what they did in doing that was to give away all of their leverage by making the tax cuts permanent,” he said. “We didn’t give up the two things they wanted us to give up: the increase debt ceiling and the continuing resolution power to fund the government.”

For the next two years, and then as long as they continue to hold the House, the Republicans have the leverage to force spending cuts, he said.

“It’s a strategy that was working very well in the beginning of 2011, until the Tea Party guys said: ‘Oh, we’re not happy only saving $2 million-a-week, so they blew the whole thing up and they didn’t save anything,” he said.

Tea Party congressmen and senators are seasoned now, he said. “They are a little bit older and wiser, and recognized that if you do $2 million-a-week for a year, you’re starting to talk about real money.”

“We have won before and we will win again, we just have to keep focus on the government’s overspending—and we want oversight hearings to remind everyone about the corruption,” he said.

“If the House votes no, the whole thing will move to the left,” he said.

“We all will be paying higher death taxes, because Republicans thought that when they voted no that the world would understand that they wanted the package to move to the right,” he said.

When the House GOP refused to support Speaker John A. Boehner’s “Plan B,” which among other things raised the threshold for tax increases to $1 million, it was a colossal mistake,  he said.

“You know what? The Democrats in the Senate, White House and the House said: ‘You are no longer part of this negotiation,’ they moved the debate to the left,” he said.

“We are going to have to do a calculation of how many billions of dollars that bad tactical move cost the American taxpayer over the next year, and years to come,” he said. “If they kick the ball away again, it gets worse, not better.”

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