Growing Republican support for raising taxes to help reduce the deficit has prompted a GOP identity crisis, sparking a clash within the party over whether to abandon its bedrock anti-tax doctrine. – GOP supercommittee members’ tax plan gives party an identity crisis
There isn’t anything good to say about what leaders have done so far to deal with America’s economic challenges. Before the 2010 mid-term elections, Pres. Obama and the Democrats didn’t even bother with an economic message, then after the elections Obama caved on his campaign pledge and Democratic economics to embrace the Bush tax cuts for the wealthiest. As for Republicans, with the right in charge we’ve gotten Paul Ryan’s plan to gut Medicare, while Grover Norquist continues to have more power than logic or Ronald Reagan’s legacy that used to be the guiding light of Republicans.
Ronald Reagan wouldn’t have paid attention to Norquist or the Tea Party. Of course, he couldn’t get nominated today by right wingers who control the primary process. But let’s say he was in charge today. Mr. Reagan would have had no problem raising taxes. It’s exactly what he did in the 1980s, something Republicans conveniently forget. Bruce Bartlett, a former Reagan man, whom I’ve quoted before:
Almost immediately upon enactment of the 1981 tax cut, Reagan came under enormous pressure to do something about the federal budget deficit. While his preferred approach was to cut spending as much as necessary, it was not politically possible to so. His aides began pressuring him to support a tax increase. Conservative activists were appalled that Reagan would even consider such a thing, but he eventually endorsed the Tax Equity and Fiscal Responsibility Act of 1982. According to a Treasury Department analysis, it raised taxes by close to one percent of GDP, equivalent to $150 billion per year today, and was probably the largest peacetime tax increase in American history.
This was just the first of many tax increases that President Reagan endorsed and signed into law. There were 11 major tax increases during his administration. And this doesn’t count the fact that Reagan intentionally delayed the start of tax indexing, which was part of the 1981 tax bill, until 1985 so as to capture a lot of anticipated bracket-creep for the Treasury. In fact, it was the failure of inflation to come in as fast as White House economists expected that created much of the deficit problem. I estimate that lower than expected inflation and the loss of bracket creep was responsible for about half the budget deficit in 1981 and 1982. It’s also worth noting that the Tax Reform Act of 1986, which was revenue-neutral in the long run, was a fairly substantial revenue-raiser its first year, increasing taxes by $18.6 billion or 0.41 percent of GDP.
The right excavating, then channeling their inner Reagan, however slightly, could actually save Republicans from the Gingrich-Cain-Perry catastrophe they’re currently facing. Back to the Washington Post:
Tensions have mounted in recent days as two of the GOP’s most fervent anti-tax stalwarts on Capitol Hill ““ Sen. Patrick J. Toomey (Pa.) and Rep. Jeb Hensarling (Tex.) ““ have lobbied party colleagues behind the scenes to forgo their old allegiances and even break campaign promises by embracing hundreds of billions of dollars in tax hikes.
If Congress can’t come up with a way to cut $1.2 trillion over the next 10 years, the Budget Act will do it for them unless some sort of postponement is worked out. A look at the deadlines that must be met and what happens if they’re not:
The two conservative lawmakers have pushed the increases as part of their work on the bipartisan congressional “supercommittee” tasked with finding at least $1.2 trillion in deficit reductions by a Thanksgiving deadline. Their plan, which also addresses entitlement spending, would generate at least $300 billion in new tax revenue over the next decade by overhauling the tax code to lower rates but also eliminate deductions and loopholes.
A long time ago I was on a conference call with George Soros, along with several other progressive new media writers and bloggers. One thing he said always struck me: how important it is to have a strong, viable Republican Party, parties to challenge one another.
Democrats have failed miserably on economics, starting with not bothering to make the case for progressive financial policy.
Republicans seem hamstrung by the right wing rabble. An identity crisis may be just the thing to wake up people that Grover Norquist’s no tax extortion is killing this country and drowning it in the bathtub.