GOP Takes a Step Back From No-Tax-Hikes Pledge

by InvestorPlace Staff | November 26, 2012 9:36 pm

[1]Over the past 25 years, one man has been largely responsible for Republicans’ unwillingness to raise taxes: Grover Norquist. President of Americans for Tax Reform, an anti-tax organization, Norquist has asked politicians to sign pledges that they will “oppose any and all efforts[2]” to raise taxes.

Over the years, Republicans ranging from Ronald Reagan to Newt Gingrich to John Boehner have signed off on the pledge[3]. In full, it reads:

“I, ______, pledge to the taxpayers of the ______ district of the state of ______ and to the American people that I will:
One, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and
Two, to oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”

In fact, about 95% of Congressional Republicans have signed the pledge.

Recently, cracks in the pledge have been starting to show. Four well-known Republican members of Congress have recently suggested they would consider breaking the pledge[4]: Sen. Lindsey Graham, S.C.; Rep. Peter King, N.Y.; Sen. Saxby Chambliss, Ga.; and Sen. Bob Corker, Tenn.

King said on NBC’s Meet the Press that he did not believe in “iron-clad positions” like the pledge. Chambliss said that he cared more about his country than the pledge, and Corker said that he was not obligated to the pledge.

Perhaps most damning was Graham’s discussion of the pledge on ABC’s This Week With George Stephanopoulos. There, Graham said he would be willing to violate the pledge if Democrats agreed to entitlement reforms.

The pledge’s power comes from the sheer number of people who sign it and who have followed it without fail. Norquist cites George H.W. Bush, who did not sign the pledge, raised taxes, and lost re-election in 1992, as an example of the pledge’s power and the problem of tax hikes. It has kept its power among Republicans because Republicans have kept the faith and not broken it, imbuing it with power.

Two things could spell an end to the pledge’s sway over Republicans. One is the reality of the fiscal cliff. In order to avoid another recession that could be caused by expiring tax breaks and looming spending cuts, they may have to compromise with President Barack Obama and let the tax cuts for the wealthiest Americans expire, a de facto tax increase. Inflexibly following a pledge might stand in the way.

Second, not all newly elected Congressional Republicans have been eager to sign the pledge[5]. About a dozen newly elected House Republican refused to sign Norquist’s pledge during the election, and several returning Republican members of Congress have disavowed their prior commitment to the pledge.

It seems that while keeping taxes low is still a Republican priority, tying one’s hands to a deal brokered by someone who is not in Congress is becoming less popular. This could bode well for a deal on the fiscal cliff.

— Benjamin Nanamaker, InvestorPolitics Editor

The opinions contained in this column are solely those of the writer.

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