Jonathan Chait's Blog, page 47

The Grover Norquist Ethanol Trap

Tom Coburn has sprung a plan to force the Senate to vote on the ethanol subsidy:

Sen. Tom Coburn has pulled the trigger and is forcing a long-sought vote on an amendment repealing billions in annual tax incentives for ethanol.

The Senate will vote Tuesday afternoon on Coburn’s motion limiting debate on his amendment that would do away with the 45 cent blender tax credit for ethanol — worth about $6 billion this year — and the 54 cent tariff on imported ethanol.

Wait, don't go to sleep, there's something going on here. The press coverage doesn't say so, but this is actually not about ethanol. It's about Republican anti-tax dogma.

I wrote about this a few months ago, but for those readers who haven't committed my blog to memory -- shame on you! --  I'll refresh. Nearly all Republicans have signed a Taxpayer Protection Pledge, which is enforced by Grover Norquist. The pledge forbids the signer from approving any increase in tax revenue under any circumstances whatsoever.

Coburn and a handful of Republicans are trying to get around this pledge. Their tactic is to negotiate revenue increases that take the form of closing loopholes and exemptions rather than raising rates. This would clearly violate the Pledge. But Coburn is trying to expose the silliness of the Pledge. He's holding a vote on eliminating the ethanol subsidy. Now, conservatives oppose the ethanol subsidy. But since the subsidy is a tax credit, then eliminating it is a tax increase, and forbidden by the Pledge.

So Coburn's goal here is to drive a wedge between conservative doctrine and Norquist's anti-tax dogma. If Norquist opposes a vote against ethanol, he reveals how absurd his pledge actually is. If he supports it, then he proves that it shouldn't be taken literally. Either way, it creates a talking point that Republicans could use to support revenue increases. And since the GOP's theological opposition to revenue increases has been driving budget policy for more than two decades, this is a pretty important development.

Pawlenty Turns Joke Into Reality

Yesterday, I joked that Tim Pawlenty would respond to the objection that no country has ever experienced a decade of 5% growth by invoking "American Exceptionalism." And voila, Pawlenty's campaign writes:

Obama's economic team doesn't have a plan, so their spokespeople attack ours. The idea that they don't believe in the American people enough to say that we can grow the economy at 5% GDP really says everything.

Defending an economic projection on grounds of patriotic belief kind of gives the game away, doesn't it?

And it doesn't even make sense on its own terms. We didn't have 5% annual growth every year when we had the American people and George W. Bush. Didn't have 5% annual growth every year when we had the American people and Bill Clinton. Or George H.W. Bush, Ronald Reagan, and so on. So to assert that we probably won't do it under Tim Pawlenty's crazy wage tax plan does not necessarily represent a lack of faith in the American people.

House Republicans Acknowledge Huge Mistake, Learn Wrong Lesson

In the wake of the New York special election, conservative pundits engaged in a frenzy of spin asserting that the House Republican budget was not to blame and that people actually liked it, or would like it once it was properly explained. The extent to which they actually believed this is unclear. In any case, the line of defense has quietly disappeared. Charles Krauthammer today argues that the Ryan budget has crippled the GOP's ability to attack Obama as a radical:

Last month, Democrats turned the race for the 26th Congressional District of New York into a referendum on Medicare, and more specifically on the Paul Ryan plan for reforming it. The Republicans lost the seat — after having held it for more than four decades. ...

Now, however, the Obama pitch is stronger: Leftist? On the contrary, I bestride the center like a colossus, protecting Medicare from Republican right-wing social engineering.

And The Hill reports that some House Republicans, feel burned by having voted for Ryan's budget. Unfortunately, they've decided the answer is not to move to the center, but to refuse to vote for a debt ceiling increase:

Some House Republicans who supported Rep. Paul Ryan’s (R-Wis.) budget are wary of voting to increase the nation’s debt ceiling, fearing a barrage of campaign ads in the 2012 election.

Republican officials say the dynamic of two tough votes so close to one another reminds them of when then-Speaker Nancy Pelosi (D-Calif.) scheduled floor votes on climate change and healthcare reform in 2009. A year later, Democrats lost control of the lower chamber.

One well-connected GOP insider said Ryan’s budget is “our version of cap-and-trade.” 

The source, who requested anonymity, added that Republican “rank-and-file members are very, very concerned that this was the canary in the coalmine on Medicare and it’s going to affect all of the other difficult votes that leadership is going to ask them to make.”

It is kind of funny that Republicans consider literally anything-- including a public revolt against their ideological conservatism -- as evidence that they need to take a more hard line politically. In this case, the interpretation is especially daft. First of all, raising the debt ceiling may not be popular, but if they precipitate an economic crisis, the public will blame them. (The public will also punish Obama for a weak economy, but that may not help incumbent members of Congress.)

Second, a debt agreement with Obama is the House GOP's best chance to get past the Ryan budget. They can argue that the deficit problem has been solved, or partially solved, and we no longer need to end Medicare as we know it. It won't fully protect them, but it will do more to protect them than anything else they could do.

&c

-- From TNR's editors, how Obama is mishandling the economy.

-- Bill Kristol is always wrong

-- A genuinely alarming poll for the Obama campaign

-- "Atlas Shrugged 2: Shrug Harder" is back on

Newt As Greek Tragedy

This has to be the most ironic possible cause of the demise of the Gingrich campaign:

The problem was the wife. Aides to Newt Gingrich have resigned from his presidential campaign in protest of what they felt was a takeover by Callista Gingrich, the candidate’s wife since 2000.

I have always had a very low estimation of Gingrich's political, analytic, and managerial skills. But if there's one problem I had total confidence in Gingrich's ability to solve, it was how to deal with being saddled with a wife who had become a liability. It's as if Rudy Giuliani had lost because he appeared at a debate on terrorism at Ground Zero and failed to mention 9/11 even a single time.

Gingrich Approval Rating Down To 0% Among Gingrich Staffers

It's almost impossible to capture the hilarity of Newt Gingrich's presidential campaign, with his entire senior staff quitting, followed almost immediately by his entire Iowa staff quitting, followed by Gingrich announcing that he will begin his campaign all over again this weekend, as if the campaign to date were that season on "Dallas" that never happened:

“I am committed to running the substantive, solutions-oriented campaign I set out to run earlier this spring,” Mr. Gingrich wrote. “The campaign begins anew Sunday in Los Angeles.”

It's just a flesh wound!

One lesson of Gingrich's hilarious implosion is that we need to use our heads when assessing the prospects of various presidential contenders. I've taken some unconventional positions on the odds of various candidates -- talking down favorite Mitt Romney, talking up Tim Pawlenty when he was a longshot, insisting that Michelle Bachmann could have an impact -- because I think the polls are a very limited tool at this point. Based on the polls, Newt Gingrich had a reasonably good chance to win the nomination, hovering around 10% for much of the year.

But I never took his candidacy with even the slightest bit of seriousness. His speakership was a trainwreck, with him finally being deposed by a coup after several near-coups. He has no establishment support and would make a horrible nominee, and he also has repeatedly taken positions that alienate activists. He's wildly undisciplined professionally and personally and is regarded all around as a has-been. Of course he wasn't going to win the nomination.

Candidates with high name recognition have an advantage over candidates with low name recognition -- they don't need to break into the consciousness of the electorate. But when name recognition is the only thing you have going for you, you're probably in worse shape than the polls suggest.

JONATHAN CHAIT >>

Everybody Gang Up On Tim Pawlenty

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The rotting carcass that is the intellectual justification for Tim Pawlenty's economic plan hasn't yet been picked totally clean. Leonard Burman points out that Pawlenty's wage tax concept would open up gaping loopholes:

Worst of all, that estimate is wildly over-optimistic because it ignores the giant, enormous, egregious tax shelters that would allow all moderately clever millionaires to slash their tax liabilities.  Here’s a simple one.  Create a corporation and pay yourself no salary but a healthy dividend.  Dividends are tax-free!  So your maximum tax rate falls from 25% to 15%.  And that assumes you’re paying the full 15% corporate rate on your income.  Any tax lawyer worth her salt could cut that substantially.

And Bruce Bartlett points out the extreme optimism of his growth assumptions:

Two points I haven't seen mentioned elsewhere: (1) According to the OECD, no county in its database has ever achieved 10 continuous years of +5% growth except Korea; a few had compounded growth rates above 5% annually for 10 year periods, but none have done so for many years and the U.S. has never done so in its history. (2) The U.S. has only once in its history gone 10 years without a recession -- the George H.W. Bush/Bill Clinton expansion that ran exactly 10 years from March 1991 to March 2001; the average postwar expansion only lasted 5 years.

I'm pretty sure Pawlenty's answer to the first one involves American Exceptionalism.

As for the second, well, keep in mind that it happened following two successive increases in the top marginal tax rate that supply-siders declared would destroy economic growth.

Bushie Projection Watch

A couple months ago, Karl Rove had one of his regular bouts of non-self-awareness and wrote:

Since Mr. Obama can't make an affirmative case for his re-election, he has decided to try convincing voters that Republicans are monstrous. As a result, America is likely to see the most negative re-election campaign ever mounted by a sitting president.

Now former Rove deputy Pete Wehner echoes:

Barack Obama’s re-election campaign will jettison the strategy of defending his record for a simple reason: it is indefensible. He has amassed fewer impressive achievements than even Jimmy Carter. As a result, Obama will unleash the most sustained, negative campaign by any incumbent in modern American history. The president knows it will be ugly. He also knows it will be his only hope.

Uh, right. Obviously, Obama doesn't have a lot of achievements that are going to impress Pete Wehner. Obama's major legislative achievements -- health care reform, financial reform, education reform, killing Osama bin Laden -- enjoy varying degrees of public support, but they all represent a hideous altering of the pristine perfection bequeathed to America by the Bush administration.

It is true that incumbent presidents have a hard time mustering strong public support during a massive worldwide economic crisis. It's also true that Obama's best political advantage is the continuing public's continued distrust of the Republican Party, justly earned by Bush. So I wouldn't be surprised if Obama spends a fair amount of attention arguing that his opponent will make things worse as opposed to a classic "Morning In America" campaign. 

But, seriously -- why do they want to insist that there's something so wrong about an incumbent winning reelection by focusing the campaign on his opponent? The self-hatred here is pathological.

Five Guys Following Eerily Familiar Path

The Senate's "Five Guys," a.k.a. the "Gang of Six" minus Sen. Tom Coburn who suddenly jacked up his demands and then bolted, is trying hard to stay relevant to the budget debate. The trouble is that the other Republicans won't go public with their deal unless Coburn joins, and Coburn has little incentive to do that:

He emphasized that the perfect cannot be the enemy of the good and stressed to reporters that many of Coburn’s ideas remain in the package after the latest group meeting on Tuesday.

Standing next to Warner, Chambliss said, “It is important that at the end of the day … we have a strong bipartisan group, and I hope that Tom Coburn is a member of that when we conclude and make our presentation.”

This, if you recall, is exactly what happened during the Senate health care negotiations. It was even called the Gang of Six. Conservatives started pressuring the Republican members, and first the most conservative one peeled off (with health care it was Mike Enzi) which in turn made the next-most-conservative Republican hesitant to keep negotiating, until the whole thing fell apart. The same dynamic is also at work in which the Republicans can negotiate for certain terms, abandon the deal, and then have those conditions remain in the legislation anyway. It doesn't exactly give you a strong incentive to cooperate.

The Unrepresented Republican Voter

Republicans have spent decades instructing their faithful on the need for low taxes on the rich. Yet a Pew survey on deficit reduction options finds Republicans split 49-49 on increasing taxes on income over $250,000.

Meanwhile, Republican elected officials and presidential candidates are split 100-0. Not even the handful of GOP senators from heavily Democratic states favor it. It would be interesting to see what would happen if a Republican presidential candidate decided to cater to the half of his party that favors higher taxes on the rich, a la John McCain in 2000 attacking George W. Bush's tax cuts as unaffordable and unfair. Instead we seem to have a competition focused on pushing those rates lower still.