Norquist talks debt fight. Will Senator Tom Coburn consider tax increases?

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O`DONNELL: Good evening from New York.

Two members of a bipartisan group of six senators working to negotiate a deficit reduction solution of their own appeared on Sunday`s “Meet the Press.” One of them was Senator Tom Coburn.

Here is the Republican senator`s response when NBC`s David Gregory asked whether the so-called “gang of six” plan would include tax increases.

(BEGIN VIDEO CLIP)

COBURN: Well, we`re not talking about it. I think if you go back and look at the commission`s report, what we were talking about is getting significant dynamic effects by taking away tax credits, lowering the tax rate, and having an economic increase that will actually increase the revenues to the federal government. We`re not talking about raising tax rates at all.

So, if there`s a net effect of tax revenue, that would be fine with me. I experienced that during Reagan`s period in 1986.

(END VIDEO CLIP)

O`DONNELL: That may not have sounded like a particularly bold response to you, but for a Republican senator, nothing braver has been said on television in this century. Senator Coburn just said that he`s willing to violate a pledge he submitted in 2004 to a man I`ve called the most powerful man in America who does not sleep in the White House.

(BEGIN VIDEO CLIP)

O`DONNELL: Meet Grover Norquist, the president of Americans for Tax Reform, whose mission statement is, quote, “The government`s power to control one`s life derives from its power to tax. We believe that that power should be minimized.”

There are some Republicans who have thought that, perhaps, perhaps, maybe, we should have raised taxes to pay for the Iraq and Afghanistan wars, or at least partially pay for them. But they would not dare say so, because that would violate a written pledge they had made to Grover Norquist, who presents every Republican running for the House, the Senate, or the White House with a pledge to sign, saying that he or she will never, ever support raising taxes in any way — including by cutting loopholes out of the tax code that might then force an individual or corporation to pay a higher tax bill, something closer to their actual rate that they`re supposed to pay.

(END VIDEO CLIP)

O`DONNELL: David Gregory pointed out that if Senator Coburn supports a “gang of six” plan that raises net tax revenue, he would violate Grover Norquist`s pledge. Senator Coburn is obviously ready for that fight.

(BEGIN VIDEO CLIP)

COBURN: Well, I think, which pledge is most important, David? Is the pledge to uphold your oath to the Constitution of the United States or a pledge from a special interest group, who claims to speak for all of American conservatives when, in fact, they really don`t?

(END VIDEO CLIP)

O`DONNELL: Joining me now, the founder and president of Americans for Tax Reform, Grover Norquist.

Grover, thanks for joining me tonight.

GROVER NORQUIST, AMERICANS FOR TAX REFORM: Hey, Lawrence. Good to be with you.

O`DONNELL: I just wanted to get it out there, exactly what Republicans are up against in this tax dialogue. Now, I know you and I won`t have any areas of agreement here. There isn`t much for us to debate. You know, I`m for higher taxes and much, much higher brackets at the top end.

The one tax bill I worked on in the Senate which you opposed and I helped get passed by one vote was the biggest tax increase in your history — your worst nightmare. So, we couldn`t be more opposite on this.

But I just wanted to get it out there that the bind that Republicans are in, I don`t think the public understands outside of Washington politics how you have worked this subject for decades. You actually have signatures on documents, on a written pledge from Senator Coburn and other Republican senators — virtually all of them — and most Republicans in the House, if not all of them, saying that they will never vote for any increase in taxation, which you define as including the elimination of any loopholes, which would then increase an individual or a corporation`s net tax.

Is that correct?

NORQUIST: No. Two things — and Coburn misspeaks, unfortunately. The pledge that Coburn has, and a copy of it right with me here is a pledge to the people of Oklahoma, and to the American people — says so right in black and white. The senator should know that.

It`s not a commitment to me, personally. And it`s not a commitment to Americans for Tax Reform. It is a commitment, in writing, to the citizens of Oklahoma and to the American people. And I hope he will keep it.

O`DONNELL: But Grover, I don`t mean to interrupt, but just to clarify that point — you wrote the pledge, and that`s the way it`s written for everyone one of them, that they pledge to their constituents, but you guys wrote it.

NORQUIST: Well, the pledge says no net tax increase, and we ask people to make that commitment. We ask — you said Republicans, but we ask everybody to make the commitment. There are a handful of Democrats over time at the federal level, at the national level, who`s taken the pledge. Ben Nelson of Nebraska has taken the pledge.

At the state level, where we have about 1,300 pledge-takers, I don`t know the breakdown, but there are quite a few Democrats.

O`DONNELL: Grover, what is the count that you have in the Senate? How many pledge-takers do you have in the Senate?

NORQUIST: Forty-one senators, 236 members of the U.S. House. So, a majority in the House, and a strong showing in the Senate — neither body is going to be passing a tax increase in the next two years and after the next presidential and Senate elections, when we have a different Senate. And one hopes that a pro-taxpayer president, we`ll be able to get significant spending and tax relief.

O`DONNELL: And what happens politically to someone who violates their pledge? What — you can mobilize against them in a Republican primary, can`t you?

NORQUIST: Well, I think if you`d ask George Herbert Walker Bush how his second term went, that was the first president who took the pledge and then broke it two years later, and couldn`t — after a fairly successful presidency, George Herbert Walker Bush managed the collapse of the Soviet Union, he got Iraq out of Kuwait without getting stuck, occupying the place for a decade, and yet when he raised taxes, he`d broken his commitment to the American people and was not able to get re-elected.

So, the pledges between candidates and the people and the American people have said several times in elections, they`re not particularly happy to have their taxes raised. They want less spending.

O`DONNELL: And, Grover, this is the single obsession/concern of you and your organization. I just want to make it clear to the viewers that you don`t — I don`t believe you have any interest in what happens on the spending side of government. Meaning, if I were to say to you, “Oh, come on, Grover, if we do this, we`re not going to be able to fund Medicare the way we would like to.” That just isn`t your concern.

You just want taxes cut and cut and cut and cut?

NORQUIST: No, to the contrary. Only if you take tax increases off the table do you ever get any spending restraint. This is not just in Washington. Thirteen governors have signed the pledge never to raise taxes. That`s why states where governors have said, we`re not raising taxes. New Jersey, they`re getting reforms because taxes are off the table. Florida, Texas, Pennsylvania, Ohio, Michigan, Wisconsin, all states where they`re not raising taxes, and because of that, they`re actually getting reforms.

Why are we looking at reforms as dramatic as Paul Ryan in the House of Representatives, overwhelming Republican vote for Paul Ryan`s $6 trillion spending reform — $6 trillion less in debt and spending than President Obama wants to spend — why? Because taxes are of the table, tax increases, but Ryan is putting forward a very impressive spending reform, taking the rates from 35 percent, the international high for businesses, to 25 percent, the European average. That`s not radical, but it is a big change in the right direction.

So, step one, don`t raise taxes. Step two, force the politicians to make decisions, to govern — to actually decide that some spending programs are worthwhile and some aren`t.

O`DONNELL: Grover, your group is funded according to “Boston Globe” report. You keep it private information how it`s funded, but “The Globe” got its hand on some of your funding — big tobacco companies, big corporate interests, big moneyed interests, obviously, backing your group. It`s not the only political group that`s backed that way, including some on the other side.

But, obviously, everything you`re doing is in service no reducing your supporters` tax bills in whatever way is possible.

But you see polls now in the American public with a vast majority saying — absolutely, push up that top tax bracket. Absolutely push it up. You have Republicans, a majority, 54 percent saying, push up that top tax bracket.

And the reason I wanted to have you on the show tonight is I wanted to make it very clear to the viewer, this is why Republicans — even who represent districts who want that top tax bracket pushed up — this is why Republicans are absolutely locked in voting against any possible tax entreat. Which presidential candidates have signed your pledge?

NORQUIST: Well, in the past, almost all of the Republicans starting with George Herbert Walker Bush. In this cycle, people are just starting to run. So, we haven`t asked people until they formally run. I expect all of the Republican candidates for president will sign the pledge.

But let me back up. We have 100,000 donors to Americans for Tax Reform. Our position is no net tax increases on the overall tax burden. We do not support or oppose any particularly tax credit.

One of the arguments that I`ve had with Senator Coburn is he wants to get rid of the ethanol tax credit, which is a left-wing effort to force people to use higher cost energy that eats up a lot of corn. It`s a very stupid incentive or disincentive. We ought to get rid of it. We were opposed to putting it in the first place.

But we don`t want to use that as a backdoor hidden tax increase — and there`ll be an effort in the Senate, along with the effort to eliminate that bill, to compensate with lower tax rates overall. So, that it`s revenue neutral.

We should get rid of all annoying tax credits and reduce rates.

O`DONNELL: Well, I completely agree with you on your description of the ethanol tax credit. But the idea that, you know, getting rid of it isn`t good enough, and if you get rid of it, you then have to –

NORQUIST: I don`t want to raise taxes to pay for Obama`s big government.

O`DONNELL: I get it.

NORQUIST: You want to raise taxes to pay for Obama`s big government.

O`DONNELL: Absolutely.

NORQUIST: So, we have a disagreement.

O`DONNELL: That`s right.

NORQUIST: So, don`t pretend it`s about ethanol. It`s about your wanting to pay for Obama`s big government.

O`DONNELL: No, it`s about two things, on my end, it is about ethanol. I think — I agree with you completely, your description is accurate, it is a stupid idea. Get rid of it. But I`m happy to say get rid of it period and let the Treasury collect the additional revenue. That`s where –

NORQUIST: Why? They`d just spend it on too much government.

O`DONNELL: Spend it on health care for people who need it.

Grover, we`re out of time. Grover Norquist, Americans for Tax Freedom — or for Tax Reform, sorry. Thanks very much for joining me tonight, Grover.

NORQUIST: Thank you.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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