Blaming Grover Norquist

Grover Norquist has become the target of blame for problems that are far more deep than just one man.

With the typical Washington blame game over the collapse of the so-called “Super Committee” in full swing, one man in particular is being singled out by many Democrats as the reason the talks never succeeded, the head of Americans for Tax Reform Grover Norquist. Even before the committee finally admitted defeat yesterday evening, Senator John Kerry was calling him the “13th member” of the committee, and claiming that he was primarily responsible for the fact that the talks collapsed:

KERRY: We Democrats put a $4 trillion dollar plan on the table. We had $1.3 trillion of cuts, and we had $1.3 trillion in revenue. Now, some of that revenue, we’re not asking that to happen tomorrow or the next day, it could happen in a year. This is a ten-year plan and longer. So we have the ability here to do something that’s fair for all Americans. But unfortunately, this thing about the Bush tax cuts and the pledge to Grover Norquist keeps coming up. Grover Norquist has been the 13th member of this committee without being there. I can’t tell you how many times we hear about ‘the pledge, the pledge.’ Well all of us took a pledge to uphold the Constitution and to full and faithfully and well-execute our duties and I think that requires us to try and reach an agreement. So we have to compromise.

Senate Majority Leader Harry Reid, meanwhile, said a week ago that Norquist was “thwarting” the committee’s negotiations and called on Americans to “impeach” him, whatever that means. Even on the right, there are some who seem to relish Norquists role, such as The Wall Street Journal which credited him with defeating the Super Committee in an editorial this morning:

So it’s all Grover Norquist’s fault. Democrats and the media are singing in unison that the reason Congress’s antideficit super committee has failed is because of the conservative activist’s magical antitax spell over Republicans.

Not to enhance this Beltway fable, but thank you, Mr. Norquist. By reminding Republicans of their antitax promises, he has helped to expose the real reason for the super committee’s failure: the two parties disagree profoundly on a vision of government.

Democrats don’t believe they need to do more than tinker around the edges of the entitlement state while raising taxes on the rich. Republicans think the growth of government is unsustainable and can’t be financed no matter how much taxes are raised.

Sounds like we need an election

Now, as you read the WSJ Editorial, it’s clear that they don’t really buy into the “it’s all Grover Norquist’s fault” meme that seems to be the theme of the day in the media. And neither do I. I’ve been fairly critical of Norquist and the extent to which Republicans have hidden behind ATR’s anti-tax pledge over the past year, especially during the hubub over the debt ceiling negotiations and the Norquist’s insistence that a debt deal should not include tax increases. Moreover, as I’ve noted, some Republicans such as Alan Simpson, Tom Coburn, Frank Wolf, and others have begun speaking out against the idea that Republicans should consider themselves bound by a “pledge” to a public policy organization when it comes to dealing with the nation’s fiscal problems. Nonetheless, it strikes me that blaming someone who isn’t a Member of Congress, and certainly wasn’t a member of the Super Committee, for the failure of negotiations that probably weren’t going to succeed to begin with is pretty silly. It isn’t  Grover Norquist’s fault that we’re in the position we’re in today, and if he departed from the political scene tomorrow, we would still have the same problems we have today.

Michael Dougherty makes much the same point:

If there is a problem here, it isn’t with Grover Norquist. The problem is with Republicans who pre-emptively sign away a policy decision they could use in governing, or in a compromise.

Here’s a simple piece of advice to Republicans who don’t like the pledge: don’t sign it.

And then if you want to prove your anti-tax bona fides, you’ll have to do it the old-fashioned way, by consistently opposing tax increases and lowering taxes.

Indeed, most Republican voters are willing to trade slightly-higher taxes on wealthy Americans, for significant adjustments to entitlement programs. That was easy to figure out years ago, before most GOP lawmakers signed the pledge.

Most lobbyists conduct back-room meetings with politicians. They extract promises of policy and support in secret. Norquist’s Pledge and the campaigns he runs against pledge-breakers are completely open and transparent.

You may not like the results, but there is nothing mysterious about them.

Doughtery is completely correct here. Which is better, an anti-tax pledge signed by a candidate for office that is publicly available*, or some back room deal made in exchange for a PAC contribution? Obviously, the candidates who signed the ATR Pledge did so because they thought it would help them either in a primary or a General Election. Nobody put a gun to their head, nobody grabbed their hand and forced them to sign something they didn’t want to. As Doughtery notes, if  a legislator truly believes that they need to vote for a bill that violates the pledge in some way for the good of the country, then they are completely free to do so and to explain to their constituents why they did it. Their fate for making that decision would be decided on the next Election Day, as it should be. Of course, they could have avoided the conflict by not signing the pledge to begin with, but again, that was a completely voluntary act. Don’t blame Grover Norquist because you did something you wanted to, Congressman.

On some level, I think it’s convenient for Republicans to have Norquist be the boogeyman here. It’s easier to have someone outside the political sphere blamed for the fiscal mess on Capitol Hill than to take responsibility for it yourself, for example. And if the press meme becomes “it’s Grover’s fault,” that’s certainly better for the GOP than saying that it’s their fault. In this respect, then, think of Grover Norquist as the Republican Fall Guy, the stunt man who stands in for the real star and takes the arrows while the person who’s really in charge sits back in their trailer sipping a latte. It’s intellectually lazy, of course, and one has to wonder why a politician would want to see themselves perceived as too weak to take on a lobbyist, but if it works it works.

Taking things from a different angle, former Congressman and current MSNBC morning host Joe Scarborough took the opportunity today to rip into Democrats who are trying to focus blame for the Super Committee’s collapse on Joe Scarborough:

Former Republican congressman and MSNBC co-host Joe Scarborough went on an extended rant Tuesday defending anti-tax activist Grover Norquist against Democratic charges that he is to blame for the collapse of the supercommittee.

“Blaming Grover Norquist is the greatest Democratic fabrication since the Tonkin Gulf incident,” said Scarborough, who called into the show by phone during a day off.

The extended tirade against the claim that Norquist is the cause for Republican inaction led Scarborough to remark that “Grover Norquist has absolutely no power in Washington, D.C.” and assert that the argument was a “straw man.”

“His idea may be powerful to conservatives, but he in and of himself is not a powerful guy,” said Scarborough. “Democrats have the President of the United States, right? They have the United States Senate… America’s most exclusive club, and they haven’t produced a budget in over 900 days.”

Scarborough continued to rail against the Grover-as-God notion, and slammed the president and Democrats for not embracing the Simpson-Bowles commission.

“The president of the United States and Democrats appoint a commission to take care of the debt [the Simpson-Bowles commission], then ignores everything that commission says,” said Scarborough. “Anybody today trying to blame Grover Norquist or suggest he’s more powerful than the president of the United States and the United States Senate…is laughable.”

Morning Joe panelist and former Tennessee Rep. Harold Ford responded that Grover was part of the problem, but Scarborough wouldn’t have any of it.

“He’s not part of it. Grover doesn’t control an army. Grover can’t raise taxes. Grover can’t produce a budget. He has a single sheet of paper they signed a decade ago,” replied Scarborough.

Scarborough has a point here. The President’s failure to follow-through at all on the recommendations of the Simpson-Bowles Commission was a pretty stunning failure of leadership. Yes, it would have been a tough fight, but then when haven’t fights over the budget, entitlements, and taxes been tough in Washington? This was supposed to have been the President’s commission, he met with the co-chairmen on more than one occasion, and their report last November was highly anticipated by everyone in Washington. Not surprisingly, of course, the reception from both the left and the right wasn’t very good, but it strikes me that this should have been a signal for Obama and others in Washington to pick up this ball and run with it. Thanks to a Tea Party inspired Republican victory in the mid-terms, the political climate was better than it’s ever been for the kind of wide ranging reform that the commission was advocating. Instead, what happens? The report gets filed away and forgotten and, less than a month later, Obama was giving the GOP everything they wanted on the extension of the Bush tax cuts. Heck, in December 2010, Obama and the Democrats could have used the Bush tax cuts as leverage to get a debt ceiling increase passed, thus avoiding the entire debacle we witnessed in the summer. Last time I checked, Grover Norquist had nothing to do with White House legislative strategy.

Just as it’s convenient for Republicans to let Norquist get blamed for failure, it’s similarly convenient for Democrats. In their case, they get a convenient whipping boy and a way to paint the House GOP Caucus as “radical” and “extreme.” Additionally, it helps to deflect from their own responsibility for this mess. As Scarborough notes, the Senate Democrats have not produced a budget in more than 900 days. 900 days. What exactly are they doing over there in the Upper House, anyway?

I’m not quite sure how Grover Norquist will become an election issue 2012, but I’m sure someone will try it. MSNBC will continue portraying him as the puppet master, some Democratic Super PAC will probably feature him in ads in targeted districts, and of course Harry Reid and others will continue to point the finger at him. In reality, of course, the fault, dear Congress, lies not in Grover, but in yourselves, all of you.

* On the ATR website, you can find a list of Members of the 112th Congress who have signed the pledge [PDF], as well as state-level elected officials [PDF] who have done so.

FILED UNDER: Congress, Deficit and Debt, Taxes, US Politics, ,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. alkali says:

    The President’s failure to follow-through at all on the recommendations of the Simpson-Bowles Commission were a pretty stunning failure of leadership.

    That bipartisan Commission failed to make any recommendations. The co-chairs of the Commission made individual recommendations following the failure of the Commission to make any progress in negotiations. It is puzzling to suggest that Obama should have decided to “pick up this ball and run with it” when the co-chairs could not win bipartisan support for their proposal even behind closed doors.

  2. @alkali:

    It’s called leadership. It’s what Presidents do.

  3. gVOR08 says:

    Doug, you say, “Obviously, the candidates who signed the ATR Pledge did so because they thought it would help them either in a primary or a General Election. Nobody put a gun to their head, nobody grabbed their hand and forced them to sign something they didn’t want to.” I’m sure you realize that the “help” they’ll get is that Norquist will refrain from helping to organize and fund a primary challenge. So you effectively admit the pledge is coerced, then claim it isn’t coerced.

    Norquist may not be the only reason the super-committee failed, and he may not be the only reason the Republicans are irrational, but he sure is a useful face to put on this. More power to the Dems. If nothing else, they’ve dragged Norquist out into the light, where hopefully he’ll turn to dust and blow away.

  4. Jeremy Kolassa says:

    @Doug Mataconis: To be fair, Doug, that’s not really a good answer. I agree with you completely, but if we take a rhetorical analysis of your comment, it’s, erm, wanting.

  5. @gVOR08:

    The fact that a politician is afraid of a primary challenge is no excuse.

  6. Lit3Bolt says:

    Shorter Doug Mataconis:

    Both sides do it since Obama and the Dems have shown no leadership or willingness to compromise in the face of Republican obstinacy, and Grover Norquist is a harmless, cute woodland elf who merely spends his days sipping nectar from flower buds.

  7. ponce says:

    The President’s failure to follow-through at all on the recommendations of the Simpson-Bowles Commission were a pretty stunning failure of leadership.

    Yeah, right.

    How dare Obama not raise taxes on the poor while gutting government services to the poor!

    How unleaderly of him!

  8. James says:

    @Doug Mataconis:

    It’s called leadership. It’s what Presidents do.

    It’s called compromising to pass a law. It’s what Congress is (supposed) to do.

    Can you explain to me again how “leadership” on Barack Obama’s part is going to break Republican obstinacy on compromise?

  9. john personna says:

    Norquist has long since made himself poster boy for fiscal idiocy: “I don’t care, as long as my taxes are cut.”

    That these chickens come home to roost is not surprising. That some bizarre meme machine would try defend that poster boy by retroactively removing him from that position is also, sadly, not surprising.

  10. Andre Kenji says:

    That WSJ editorial, not Norquist, that´s the problem. The point is not about the size of government or about the growth of government, but a 10% of the GDP deficit. Reducing it to controlable levels(Something like 3% of the GDP) would require big spending cuts and big tax increases.

    The point here is about paying for the government that Americans already have, not about it´s size. The problem is that no one in the United States understands what is happening here.

  11. john personna says:

    @Andre Kenji:

    The problem is that no one in the United States understands what is happening here.

    Seriously?

    Wasn’t the Grand Bargain exactly what you ask for?

  12. Steven Donegal says:

    Republicans won’t even consider Obama’s budget proposal. In fact, as Mitch McConnell has made abundantly clear, Republicans won’t support any proposal that Obama would support. Simpson-Bowles proposes significantly more tax increases and significantly greater defense cuts than Obama’s budget. Two questions: In which parallel universe will Republicans support Simpson-Bowles? In which parallel universe will Republicans support Simpson-Bowles if Obama supports it?

  13. tyndon clusters says:

    Substitute Rush for Grover in Joe’s rant and you could argue that Rush has no impact on conservative politics, after all, “Rush doesn’t control an army. Rush can’t raise taxes. Rush can’t produce a budget…”

    All true statements leading to a false conclusion that neither Rush or Norquist have power or influence whiich is patently absurd.

    Look at how many moderate Repubs lost primary challenges to Tea Party activists who embraced Norquiist’s stance on not raising taxes.

    An overwhelming majority of Americans believe that raising taxes and cutting spending is the proper response.

    So, the question to Mr. Mataconis is simple, which part of this equation do the Repubs reject?

    And show me where the Dems have insisted that they will NOT cut ANY social entitlement spending and have not budged one iota from this opening gambit?

    The point is for the Dems to cut some spending and the Repubs to raise some taxes, kinda like in the 90s when this was done several times by Clinton and the Gingrich led Congress.

    Seems like a good model to emulate, no?

    So what has been the problem? We all know where the intransigence has orginated and a large part of that is due to the Norquist pledge

  14. mantis says:

    Oh good, another post where Doug pretends we live in a fantasy world in his head.

    It’s called leadership. It’s what Presidents do.

    Patently absurd. First of all, Simpson-Bowles called for twice the revenue increases and twice the defense cuts that the supercommittee was attempting. Please tell us, in your infinite wisdom, how the president could have “led” that plan to fruition?

    Thanks to a Tea Party inspired Republican victory in the mid-terms, the political climate was better than it’s ever been for the kind of wide ranging reform that the commission was advocating.

    See above. Also, are you insane? You think the Tea Party created an atmosphere that would welcome major tax increases and cuts to defense spending? What planet do you live on, and are rents reasonable?

    As Scarborough notes, the Senate Democrats have not produced a budget in more than 900 days. 900 days. What exactly are they doing over their in the Upper House, anyway?

    Recognizing the composition of the lower house. Oh, you’re going to pretend they don’t exist. I see.

    Another thing Doug is pretending doesn’t exist is the president’s debt reduction plan, which called for a $3 trillion reduction over ten years through a combination of tax increases, cuts to entitlement programs, defense spending decreases. This was the president’s initial proposal, and thus a starting position for negotiation within the supercommittee. As has become painfully clear in recent years. Republicans aren’t interested in negotiating. Part of that is their pledge go Norquist that they will avoid the difficult choices of governance.

    So what was Doug’s response to the president’s proposal? He whined that it wasn’t fair because it had more tax increases than cuts.

    So it seems to me that what we’ve really got here is $1.5 trillion in tax increases and $580 billion in actual new spending cuts. This is what the President calls “fair”?

    Yet Doug thinks it’s terribly unfair to call out Norquist and the Republican members of congress who are beholden to him. Doug doesn’t seem to find anything unfair about the Republicans position that any approach to the debt should be all cuts, no tax increases. But the president proposes something with more tax increases than cuts (even though it really doesn’t)? Well, that’s just beyond the pale!

  15. Chefmarty says:

    As I listen to the Kerry clip (several times over), not once do I hear him blame Grover Norquist, but rather the blind fealty to Norquist’s oath that came in the way of any potential compromise.

    Norquist’s just doing what he gets paid to do; it’s the juvenile Republicans on the committee and their unwillingness to do what’s best for the country that’s to blame, and I think that’s what Kerry was getting at.

  16. Nikki says:

    I still say everyone who signed that pledge and puts adherence to that oath above the wishes of the American people and the well-being of the country should be charged with and tried for treason.

  17. Liberty60 says:

    @Chefmarty: This, and @Nikki: This.

    The big story on the right seems to be “Its not Grover’s fault, it is the fault of the feckless and incompetent Republicans who signed the pledge!”

  18. Ben Wolf says:

    @Andre Kenji:

    The point is not about the size of government or about the growth of government, but a 10% of the GDP deficit. Reducing it to controlable levels(Something like 3% of the GDP) would require big spending cuts and big tax increases.

    Our current deficit is not out of “control”. It is exactly what the government wants it to be, and it is exactly what the private sector wants it to be. The United States cannot run out of money any more than a scorekeeper at a football game can run out of points.

  19. john personna says:

    @Ben Wolf:

    I get you, but I think you always fail to not the limiting cases.

    Could Mexico or Argentina equally borrow as much as they wanted?

  20. Ben Wolf says:

    @john personna: The U.S. doesn’t borrow anything. This is the greatest obstacle people have to understanding the monetary system.

    When the government spends, it just credits accounts. Poof money from nowhere. It does this by transferring reserves from the Fed to the recipient’s bank. The ultimate result is that increased government spending increases bank reserves, which drives down the inter-bank interest rate as thse banks compete to rid themselves of the excess and thereby bid the inter-bank rate down toward zero. This means that unless it intervenes the Fed will quickly lose control of interest rates, so it has two options: pay interest on reserves (which it rarely does), or issue bonds.

    How does bond issuance control interest rates? Well, U.S. bonds are bought through tranferring bank reserves back to the government’s account at the Fed, draining reserves and taking downward pressure off the inter-bank interest rate. The government isn’t actually borrowing when it issues debt, it’s simply engaging in a monetary operation. Bank reserves are currently at all-time highs which means the government has to issue a lot of debt to keep interest rates from falling to zero.

  21. john personna says:

    @Ben Wolf:

    Did you explain why sovereign countries, with control of their own currencies, can indeed fail to finance debt at a reasonable rate and face default?

  22. Ben Wolf says:

    @john personna: Give me an example.

  23. john personna says:
  24. “Wasn’t the Grand Bargain exactly what you ask for? ”

    No. In fact, the whole Democratic approach to the issue “taxes” is damaging. At some point taxes to everyone, not only the rich are going to be increased, and in fact they are ceding the issue to the Republicans.

  25. “The government isn’t actually borrowing when it issues debt, it’s simply engaging in a monetary operation.”

    That was tried in Germany in the 20´s and in Zimbabwe recently. It did not work.

  26. john personna says:

    @André Kenji de Sousa:

    No. In fact, the whole Democratic approach to the issue “taxes” is damaging. At some point taxes to everyone, not only the rich are going to be increased, and in fact they are ceding the issue to the Republicans.

    Explain that to me, because it seems that no tax is palatable at this moment. How can you get what you want, without at the same time saying that it is “damaging?”

    Are you pinning the fact that no tax is palatable on those who float one or the other tax balloon? They shouldn’t even ask, because that cedes the issue to the Republicans?

  27. Ben Wolf says:

    @john personna: You’re going to have to try harder. Mexico defaulted because it kept its currency fully convertible into USD, meaning the central bank had to keep enough foreign currency on hand to satisfy anyone who wanted to exchange their pesos. Mexico was forced to buy dollars on the open market, which meant devaluing their own currency.

    @Andre

    That was tried in Germany in the 20´s and in Zimbabwe recently.

    That you think this was at play in Germany or Zimbabwe just means you don’t actually know much about the historical circumstances. Short answer to your assertion: No, you are incorrect.

  28. “Our current deficit is not out of “control”. It is exactly what the government wants it to be, and it is exactly what the private sector wants it to be.”

    Servicing the debt is already one of the greatest expenses of the federal government. It´s only going to get bigger. Servicing a much bigger debt is going to be a drag in the economy. Specially when investors refuse to buy these bonds on zero interest rate.

  29. “Mexico defaulted because it kept its currency fully convertible into USD, meaning the central bank had to keep enough foreign currency on hand to satisfy anyone who wanted to exchange their pesos”

    Mexico never did that. ARGENTINA that did.

  30. Ben Wolf says:

    @André Kenji de Sousa: The Fed intervenes to ensure interest rates do not drop to zero, so don’t worry. Although the evidence is that the bond market will continue to buy no matter what, as evidenced by Japan where yields have, in fact, dropped to zero. An autonomous currency issuer with a floating rate of exchange (a country which is monetarily sovereign) is not revenue constrained. Ever. It always has the money it needs to meet liabilities. The government can no more run out of money than a scorekeeper can run out of points to put on the board. The only constraint on spending is inflation.

  31. Ben Wolf says:

    @André Kenji de Sousa: You are confusing convertibility with fixed rates of exchange. Mexico’s peso was fully convertible. Argentina’s peso was fixed to the dollar. Both countries surrendered their monetary sovereignty to a foreign power.

  32. Ben Wolf says:

    All the countries involved in the LDC were taking on debt denominated in a foreign currency. Beginning to notice a patten?

    . . . rising dollar exchange rates in response to the high U.S. interest rates of the early 1980s increased the difficulty of meeting debt commitments. The value of the dollar increased by 11 percent in 1981 and 17 percent through most of 1982 against the strongest currencies (see figure 5.6). Because the bulk of LDC debt was placed in dollars, the burden of servicing dollar debt became increasingly more difficult over time.

    http://www.fdic.gov/bank/historical/history/191_210.pdf

  33. “Explain that to me, because it seems that no tax is palatable at this moment”

    That´s the problem. When you are running deficits that are as large as 10% of the GDP its stupidity to say that you don´t increase taxes. When Democrats says that taxes should only be increased on the rich they are effectively ceding the issue to the Republicans. That means that taxes are horrible and someone else should pay for it.

  34. Ben Wolf says:

    @André Kenji de Sousa:

    When you are running deficits that are as large as 10% of the GDP its stupidity to say that you don´t increase taxes.

    You need to look into sectoral balances. To put it simply, the government’s deficits are the private sector’s savings. Decreasing the deficit will impede’s the private sector’s ability to recover from the crash.

    http://pragcap.com/sectoral-balances-and-the-united-states

  35. “You need to look into sectoral balances. To put it simply, the government’s deficits are the private sector’s savings.”

    They have nothing to do with each other. One can argue that when the private sector is not spending the government should spend, but that should no means that you have to run large deficits.

  36. Ben Wolf says:

    @André Kenji de Sousa: The private sector is deleveraging. Each dollar repaid to a creditor (a bank) is extinguished from the private sector. If government were to decrease its deficits the result would be a steady drain of financial assets (money) from the private sector as it pays down its debts. Fewer dollars means fewer transactions means economic contraction. Government is currently spending enough additional money into the economy to offset this deleveraging and giving the private sector time to repair its devastated balance sheets.

    Interfering with this process will simply extend the economic downturn by making it more difficult for the private sector to save.

  37. Eric Florack says:

    if the american people wanted compomise with the democrtas.. who they see rightly as the authorsbof the disaster, the voting last november wouke be far different, as would current polls.

    Norquist may be a handy target for Dems who didnt get their way but the fact is Norquist has more support than they.

    and lets be mindul of who called those of us who said it wouldnt work because of that factor ‘hobbits’ …..john mccain.

  38. Hey Norm says:

    Guilty as charged. Norquist is the face of Republican tax catechism.
    However people need to get off this leadership fantasy.
    Obama was hands off on Bowles Simpson. It didn’t go anywhere.
    He embraced the Gang of Six or Seven. A Republican Aide called it the kiss of death.
    He got into the Grand Bargain up to his elbows and Boehner couldn’t deliver the Tea Stained caucus.
    Then there was the Super-Committee… In which he schnookered Republicans into what he wanted…major long-term deficit reduction…which includes Eliminating the Bush Deficit Exploding Tax Cuts…and doesn’t touch entitlement benefits.
    You professional pundits keep whinig like little girls about leadership…and Obama just keeps getting it done…like leaders do. Yeah I know you want a G.W.Bush with a bullhorn yelling about getting them dead or alive. I like the guy that actually did it.

  39. James says:

    @Hey Norm:

    Yeah I know you want a G.W.Bush with a bullhorn yelling about getting them dead or alive. I like the guy that actually did it.

    +1

  40. “If government were to decrease its deficits the result would be a steady drain of financial assets (money) from the private sector as it pays down its debts. “

    No, it would not. That would happen in THEORY if the government were to transform the deficit in a superavit. Besides that, money that investors lend to the government is money that is not being spent in the private sector.

    The real drain here is the INTEREST RATE and the money required to service thew debt.

  41. Just nutha ig'rant cracker says:

    @Ben Wolf: I can’t put my finger on why (my economic’s knowledge is not good enough) but your theory reminds me of an economics version of perpetual motion.

  42. Ben Wolf says:

    @André Kenji de Sousa: The government doesn’t borrow. It simply switches reserves it created back and forth between the government’s account and the The buyer’s bank. The money that gets “borrowed” just sits there, it doesn’t get spent because the government isn’t revenue constrained. It doesn’t fund itself by taxes or debt.

    @Cracker

    It isn’t a theory. This is how the system we have actually functions. I’m not telling you my ideal system, I’m just telling you how it is.

  43. Ben Wolf says:

    A lot of what we’re taught about economics is wrong, because most schools of thought are primarily driven by ideology and assumptions.

    The money multiplier: myth

    Government taxes and borrows to spend: myth

    Deposits create loans: myth

    Deficits drive interest rates up: myth

    We have a long-term debt crisis: myth

    Government can go broke: myth

    A good place to start would be here for those who really want to understand, but the subject is highly complex and counterintuitive to what we’re taught by neo-liberal economics.

    http://pragcap.com/resources/understanding-modern-monetary-system

  44. Ben Wolf says:

    @André Kenji de Sousa: We could pay off that $15 trillion in “debt” tomorrow if we so choose because we aren’t stuck with it. The only results would be:

    1) the private sector loses its risk-free savings vehicle

    2) The Fed quickly loses control of interest rates as the flood of reserves into the system forces banks to compete to rid themselves of the excess, bidding the interest rate down to zero. Unless of course the Fed quickly jacks up the IOR.

    Would that make you sleep better?

  45. john personna says:

    @André Kenji de Sousa:

    That´s the problem. When you are running deficits that are as large as 10% of the GDP its stupidity to say that you don´t increase taxes. When Democrats says that taxes should only be increased on the rich they are effectively ceding the issue to the Republicans. That means that taxes are horrible and someone else should pay for it.

    I don’t get the logic of that. When only the barest taxes may be discussed you say that the Democrats should just go whole hog and propose the unacceptable?

    That in your mind may not “cede” the argument, but it sure as hell loses it in this political environment.

  46. Andre Kenji says:

    I don’t get the logic of that. When only the barest taxes may be discussed you say that the Democrats should just go whole hog and propose the unacceptable?

    They are not unacceptable per se. Both Reagan and Clinton raised taxes. There is no economist that is not a partisan hack that says that you can´t raise taxes or cut spending during a recession, as Bush strategist Matthew Dowd noted recently. If tax increases are bad for middle class then why they are good for the rich? That´s cheap demaguery.

    There are some surrealist thinkers that think that the United States can pay a 100% of the GDP debt in one year, but that´s not realist. Unless you are willing to wait until the debt is 200% of the GDP and foreign investors begins to demand high yield rates to buy Treasury Bonds, requiring a tough austerity plan.

  47. john personna says:

    @Andre Kenji:

    Reagan (R) and Clinton (D) both operated in very different environments.

    What I’m contesting here is that you (and others) lay the broad environment at the feet of the Dems, as if they’d only need to demand more to change it.

    Which is why I call BS on this “cede” business.

  48. “What I’m contesting here is that you (and others) lay the broad environment at the feet of the Dems, as if they’d only need to demand more to change it.”

    I´m not saying that. I pointing out that the Dems positions regarding taxes is childish and that when both Congressional Democrats and Obama talk about “tax cuts for the middle class” they are talking in Republican Terms.

    I always thought that Democrats should have chosen a governor from purple/red state, not an untested Senator from Illinois. Now, it´s too late.

  49. Hey Norm says:

    From Dana Millbank….
    “…When Democrats floated their proposal combining tax increases and spending cuts, Kyl rejected it out of hand, citing Republicans’ pledge to activist Grover Norquist not to raise taxes. Kyl’s constant invocation of the Norquist pledge provoked Senate Majority Leader Harry Reid (D-Nev.) to snap at Kyl during a private meeting: “What is this, high school?”
    Not a fan of Millbank…but…

  50. Hugh says:

    The Blame and accountability are sides of the same coin.

    Norquist’s primary aim is the shrink the size of the U.S. that it can be drowned in a bathtub. The tax pledge is only one of the means to that end. Other means include anything that reduced Federal tax revenues. As Free-trade agreements export governmental tax bases at all levels, they also kill American jobs in the process, but the Norquist Pledge conspirators apparently believe their anti-government end of reducing tax revenue justifies the means; decimating the U.S. workforce.

    Also see:

    Who Benefits From Norquist Pledge? Norquist’s “Employers”.

    http://lezgetreal.com/2011/07/who-benefits-from-norquist-pledge-norquist%E2%80%99s-employers/