Reason Foundation

Reason Foundation

“If you focus on the deficit, then tax increases are on the table.”

Americans for Tax Reform’s Grover Norquist on why deficits are a distraction, why Republicans shouldn’t compromise on the budget, and why low taxes are the key to cutting spending.

Peter Suderman
April 27, 2011

In 1985, Grover Norquist founded Americans for Tax Reform (ATR), an advocacy group that opposes all tax increases on principle. Since then, he’s gone on to become one of the most influential conservative activists in the country. Much of ATR’s success has been a byproduct of getting elected officials to sign its Taxpayer Protection Pledge—a promise to oppose any and all tax and revenue increases.

In addition to his decades-long focus on lowering taxes, Norquist has been consistently antagonistic toward politics driven by concern about the federal deficit. In 2005, he told Reason that the deficit “is an uninteresting and unimportant number,” and that his greatest fear for the second Bush term was that a simple focus on deficits would eventually lead to tax hikes.

Earlier this week, Associate Editor Peter Suderman spoke with Norquist about today’s deficit politics, the brewing war over the budget, and whether Republicans need to compromise with Democrats in order to address the long-term debt.

Reason: In 2005, Reason asked for your greatest hope or your greatest fear about the second Bush term. You said that your greatest fear was that deficit worries would lead to tax increases, and you said that “the deficit is an uninteresting and unimportant number that is the difference between two very important numbers: total federal government spending, and total federal taxes.”

Grover Norquist: Yeah.

Reason: It seems like your worry has come true in some ways. A lot of Republicans seem to be focusing on the deficit as an issue. So do you stand by that statement, that the deficit is “uninteresting and unimportant?”

Norquist: The way we could screw up the pending Republican—solidifying a Reagan Republican House and electing a Republican Senate, meaning a majority Senate in 2012—the way to screw that up is to lose focus on spending and get distracted on chasing the deficit. Because then Democrats have an equally valid solution, which is to raise taxes. Whereas if the focus is spending, there are only two ways to fix that: spend less, or have pro-growth policies. Democrats don’t want to spend less. Democrats have no pro-growth policies. Republicans have a whole bunch of things that would be good for the economy: Take the trial lawyers and drop them in the ocean. Have less regulation. Spend less. Cut corporate rates. All sorts of things. So that the same size government is less oppressive and less expensive. And Republicans have $6 trillion worth of spending restraint that they’re willing to put forward in the House.

But if you focus on the deficit, then tax increases are on the table. And then all of a sudden, you get into class warfare. If you announce, “Oh, we’re going to be getting a trillion dollars in tax increases,” you take all the taxpayers who should be united in fighting against higher taxes and turn them into fighting each other. Oh don’t tax me, tax that guy. That’s a disaster. That’s the one danger I see.

Reason: Obviously, then, you still view that as a big danger. The other part though, is that it’s not just yearly deficits that are the big concern. It’s also the long-run debt. Just about every major analyst, from the CBO to the IMF to the S&P is saying that the long-term debt is a big problem for the country’s finances.

Norquist: Yes, but that can only be fixed through economic growth and reforming entitlements. This year’s deficit can only be fixed by slashing spending in a way that scares voters, and raising taxes. That’s why Democrats want you to focus on two things: Short term, and the deficit. Ryan’s plan focuses on the long-term, meaning total debt, and spending. If we’re focused long-term and spending, you can make radical changes—$6 trillion in less spending—without frightening the horses. Look at—you got all but four Republicans to vote for the Ryan bill. That is an incredible collection of politically smart people betting their futures that this is politically sellable.

Now, you couldn’t get the same collection of people to vote for cut and slash next week. If you’re not reforming government, if you’re not using competition or federalism to allow you to have more leeway and spend less, which is what we did with welfare, and what Ryan wants to do with Medicaid and food stamps and so on—if you’re not doing that, then all you’ve got is: “You used to give Mary four? Give her two.” Mary’s not happy.

But if you say here’s all the stuff we’re doing, and we can do it differently, and different states can make different decisions, and that will make the whole thing cost less—as happened with welfare reform—that, over time, is a much more radical change. So, long term: Focus on spending and total debt versus short term and focus on deficit. Republicans are wise to do Ryan and would be unwise to step into a room where “well, it only works if you balance the budget in 10 years,” or “it only works if you reduce the deficit to X in the next three years.” Everything that forces you to look short term takes reforms off the table.

Reason: It seems to me that in order to get the votes to reform programs like Medicare and Medicaid, you have to cut some sort of a deal. Can you get to entitlement reform without making a deal with Democrats? What sort of deal should Republicans be willing to make in order to achieve those entitlement reform goals?

Norquist: The political equivalent of the deal that they were always talking about in The Godfather: One you can’t refuse. Why did Obama sign an extension of the Bush tax cuts? Because he thought he coudn’t surivive politically if he didn’t.

Reason: It strikes me that it’s much easier for a Democrat to sign onto a policy that keeps taxes low.

Norquist: That’s why I’m pointing to the other things that we got from him. Spending restraint—that he didn’t want to give us. If you go into the next election and say that we’ve got $6 trillion in spending restraint. You’re bankrupting the country. He will come back and give as much as he is scared. And no more than he is scared. I think if you ask “pretty please” you get nothing. And if you say here’s where we are: We want to go into the election with our $6 trillion less, and your $9 trillion more, and your trillion and a half in tax increase and we’ll meet you in November. He will start throwing his allies overboard. If not, well, then we win the election, and then we fix things.

[ talked with Norquist in May 2008, when he published Leave Us Alone: Getting the Government's Hands Off Our Guns, Our Money, Our Lives. Click below to watch or go here to download. Article continues below video]

Reason: So you’re saying that the best negotiating position for Republicans is to put their foot down and not give in, especially on the tax issue.

Norquist: Yes, yes. Exactly. Because if you allow tax increases, that reduces the pressure for spending cuts. Every dollar of tax increases is a dollar you’re not cutting spending—if you focus on the deficit. Taxes are not part of the problem. Tax increases are what you do instead of solving the problem. You don’t get spending restraint unless you take taxes off the table.

If the governor of New Jersey has said he was open to some tax increases and some budget restraint, he’d have never gotten budget restraint. Same thing with the governor of Florida or Texas. Or in California where the legislature said to the governor: We’re not raising taxes. And then the governor ran around and has been cutting spending.

Reason: You’ve talked about this for a long time, that it’s a one-two punch: Cut taxes first, and then you get less spending. But it seems like we tried that in the Bush years. We got tax cuts. But we didn’t see spending cuts.

Norquist: No, no. The Bush administration stood in the middle of the Leave Us Alone coalition and he talked to everybody’s issues. “I’m not going to steal your guns, and I’m going to spend too much. I’m going to cut your taxes, and I’m going to spend too much. I’m going to leave your home-schooling alone, and I’m going to spend too much. I’m going to leave your faith and your family alone, and I’m going to spend too much. I’m going to leave your small businesses and corporate taxes alone, and I’m going to spending too much.” And everybody said, “Thank you for my vote-moving issue, and I wish you wouldn’t spend so much.”

But nobody had “spend less” as a vote-moving issue. So when he spent too much—and there’s nobody in the coalition who said “I’d like to spend too much,” nobody in the coalition demanding additional spending—but there are all these pressures from the left and the establishment and members of Congress to spend, spend, spend.

The Tea Party changed that. Now there’s somebody in the boardroom sitting at the end of the table with a big baseball bat who says: “Spending too much is the deal-breaker for me.”

Why did Bush not announce that he was going to start stealing guns? Because he knew if he did that people would throw something heavy at him or walk out of the room. If he said he was going to start annoying home-schoolers or raising taxes, same thing.

But there was no organized, visible opposition—there were people who wanted to vote Republican who would drift out of the room quietly if you spend too much. But there was no sense in which if you spend too much you can see the hemorrhaging. Because of the Tea Party movement, the people who are motivated by size of government became a visible, palpable part of the movement.

Reason: I favor less spending, less spending, and less spending. But the major spending increases over the next couple of decades come from health care programs. And looking at the polls, the Tea Party doesn’t seem to want to see Medicare cut at all. Is the Tea Party really going to be an effective whip on spending in the Republican party if they’re not in favor of Medicare cuts?

Norquist: The Tea Party isn’t stopping that. The New York Times poll says 47-44 in favor of the Ryan approach, which when we’ve only started to explain is not bad at all. This is one where you make the case about how to make the case and that this is what’s necessary to shrink government. It’s very doable.

Reason: If there are no tax increases, and there’s no compromise—we’ve got 36 percent of government spending right now is deficit financed. Is it really plausible to cut 36 percent of each year’s spending out?

Norquist: No, this isn’t about balancing the budget next year. This is the deal that the Democrats have—you have to raise taxes by whatever percentage or cut spending by whatever amount. So since you can’t do it all in spending next year, you have to do it in taxes. But as Ryan says, over the next decade you can do it all in spending restraint and put yourself on a path to pay down the debt. That’s the way to go. Don’t give yourself an artificial deadline by which you have to do something.

Reason: So your advice to Republicans is to make a deal, but don’t compromise to do it.

Norquist: Yeah. You say, “Here’s what we want to do. We want to do Ryan. Do you want to do Ryan with us?” And as you get closer to the election the answer is: They don’t want to do anything. We have a plan. Democrats have no plan other than spend and tax. And then we beat them in the next election.

But I believe that as you get close to that election—you already saw Obama panic that his 2012 budget looked silly and anemic and not grown-up compared to Ryan. David Brooks is writing that Ryan is important and need to be done and stuff. David Brooks! If he sees that as the dynamic, you can imagine—he lives in establishment central. And he says Ryan is serious. Ryan is grown-up. Where’s the grown-up, serious alternative from Obama? But there is none.

So Obama’s started moving. Now, he’s lying about it. But theoretically, in his speeches, he’s started moving towards Ryan—while trashing Ryan. Because he realized he was in an untenable position. Why were they giving us the little spending cuts in the last couple months? They think that’s where the electorate is. And I think they’re right.

They will come to us unless we offer to go to them. And I don’t want to go to the 2012 election with Republicans and Democrats hugging in public, in D.C., and agreeing on a number on spending and taxes. Because if they do, then why do we need a Republican Senate? Why is Obama unacceptable as president?

Obama is only unacceptable if Republicans say, “Here’s where we’re going. And he won’t go there with us. Oh, he’s willing to do a little bit? That’s nice, but we’re still going over here—and he’s what’s stopping us from moving forward.”

This is what the Democrats would do to Republicans, right? They’d say they want to do a bunch of stuff and the Republicans would agree to half of it, and then Democrats would thank Republicans for agreeing that they were morally superior for wanting to do more, and thank them for giving half of what they asked for—and then berate them.

We need to do the same thing, but to shrink the size of government: “We want to shrink it more. Glad you agree to some of this, because you agree that we’re correct, you’re wrong, we’re moving in the right direction, and you just don’t have the guts or the wherewithal to come as quickly with us as we want to. We’ll see you after the election.”

Reason: So if Democrats don’t move toward the Republican position—

Norquist: You beat them in the election, and then you do it.

Reason: Do you care to handicap the chances of something like the Ryan plan, with a major reform of Medicare and Medicare, happening in the next our years?

Norquist: In the next four years? Very likely. The House is fine, and it’ll strengthen in the next election. In the Senate, we’ll pick up more than the four we need to get a majority. Perhaps somewhere between four and 10. And then we just need to find a candidate to sign the bills of the Republican House and Senate. It doesn’t have to be the smartest guy in the world because Haley Barbour is going to be chief of staff. We can elect anybody and the chief of staff will make sure things work.

Peter Suderman is Associate Editor

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