Top Republicans Signal Willingness to Break Tax Pledge

Sunday, 25 Nov 2012 06:05 PM

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As Congress prepared to dive back into "fiscal cliff" talks on Monday after the Thanksgiving holiday, there were growing signs that the long-standing Republican resistance to raising taxes is beginning to crack.

On Sunday, three leading Republicans — Sens. Lindsey Graham and John McCain, and Rep. Peter King — said they no longer viewed the anti-tax pledge designed by activist Grover Norquist to be binding on them. Their statements followed a similar one Thursday by Georgia Republican Sen. Saxby Chambliss.

The decades-old pledge from the Americans for Tax Reform group has been signed by 238 House members and 41 senators in this Congress and has essentially become inescapable for any Republican seeking statewide or national office over recent election cycles, especially in the Republican-controlled lower chamber.

Editor's Note: Use This Single Loophole to Pay Zero Taxes. See Video

But on Sunday, there were signals of a sudden shift:
  • “I agree entirely with Saxby Chambliss,” King said on NBC’s “Meet the Press.” “A pledge you signed 20 years ago, 18 years ago, is for that Congress. … The world has changed, and the economic situation is different.”
  • “I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform,” Graham said on ABC’s “This Week.”
  • McCain, meanwhile, said he wants to focus on closing so-called tax “loopholes” to raise revenue but stressed he wants no increases to the marginal tax rates. Many observers, however, note that closing loopholes will still represent an effective tax increase. "We can close a lot of loopholes," McCain said on “Fox News Sunday,” identifying deductions on charitable donations and on mortgage interest.
For his part, Norquist on Friday said that breaking the pledge is breaking a promise to constituents who elected their representatives in part on their commitment against tax increases.

In a statement to Newsmax on Friday responding to Chambliss’ statements, Norquist said, "Sen. Chambliss promised the people of Georgia he would go to Washington and reform government rather than raise taxes to pay for bigger government. He made that commitment in writing to the people of Georgia.

"If he plans to vote for higher taxes to pay for Obama-sized government he should address the people of Georgia and let them know that he plans to break his promise to them."

If no deal is reached before the end of the year, a poison pill law of tax hikes and massive spending cuts, including slashes to the military, comes into effect with potentially catastrophic effects for the fragile US economy.

After months of stalemate, congressional leaders met on November 16 with President Barack Obama — who is deemed to have a considerably stronger negotiating hand after handily winning re-election 10 days earlier.

Just five weeks now remain in the calendar year to conclude an agreement before the expiration of tax cuts put in place during the presidency of Obama's predecessor, George W. Bush.

Editor's Note: Use This Single Loophole to Pay Zero Taxes. See Video

Obama has said that any deal he concludes would have to include an increase in taxes on wealthy taxpayers, something congressional Republicans so far have rejected.

The plan he proposes — and presented to voters on the campaign trail — would raise the tax rate for top earners, but keep Bush-era tax rates for individuals who make less than $200,000 per year and families earning less than $250,000.

Most Republicans still insist raising taxes on the wealthy would be counter-productive and only serve to slow economic growth and ensure that the country continues to be plagued by economic stagnation.

They insist that higher taxes would dampen spending and hiring and investment by business owners.

The top income tax rate, which now stands at 35 percent, will automatically revert to 39.6 percent at the beginning of 2013 unless there is a new budget deal.

Republicans say they prefer to look at ways to bring in more tax revenue by completely overhauling the old and unwieldy tax code, including closing what they say are "special interest loopholes" likely to hit the poor and the middle class as well as the rich.

But Graham said it was fair to ask his party to do this and raise taxes for Democratic concessions on reducing government spending on social welfare programs, known here as entitlements.

"When you're $16 trillion in debt, the only pledge we should be making to each other is to avoid becoming Greece, and Republicans -- Republicans should put revenue on the table," Graham said.

"I want to buy down debt and cut rates to create jobs, but I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform," Graham added.

Graham's apparent willingness to ignore the no higher taxes pledge came just days after Chambliss, said he would not be not bound by the promise either.

"I care more about my country than I do about a 20-year-old pledge," Chambliss said.

King would not predict anything about a deal before it has actually been presented to Congress - so that an actual deal can be made between Obama and House Speaker John Boehner for Congress to discuss, rather than have possibilities batted around killing any potential “grand bargain.”

“I don’t want to prejudge any of this,” King said. “[The] bottom line is we cannot have sequestration. We can't go off a fiscal cliff. We have to show the world we’re adults... I think everything should be on the table. I myself am opposed to tax increases. The fact is that speaker and the majority in leader and the president are going to be in a room, trying to find the best package. I’m not going to prejudge it. And I’m just saying we should not be taking ironclad positions.”

Added King, “The world has changed and the economic situation is different. Ronald Reagan and Tip O’Neill realized that in the 1980s. I think everything should be on the table,” he said. “I, myself, am opposed to tax increases. The fact is the speaker and the majority leader and the president are gonna be in a room, trying to find the best package. I’m not gonna prejudge it. And I’m just saying we should not be taking iron clad positions. I have faith in John Boehner to put together a good package.”

Economists have said that closing loopholes and ending deductions will likely not generate sufficient money to chip away at the national debt, and that a combination of tax increases and spending cuts will be needed.

Speaking on the same program as Graham, Democratic Senator Dick Durbin insisted that tax rates for the highest earners do have to up.

"How in the world are you going to reduce deductions and generate enough revenue for meaningful deficit reduction," Durbin said.

Editor's Note: Use This Single Loophole to Pay Zero Taxes. See Video

Some experts said that there need not be a "grand deal" by the end of the year, because they could give themselves an extension by passing new legislation.

"Anytime Congress puts handcuffs on itself, it still has the key to those handcuffs. It can open the handcuffs anytime they want, or say. 'OK, we'll change the lock'," said Roberton Williams at the Tax Policy Center, an independent think tank.

Material from Agence France-Presse was used in this report.

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