Once the words "no new taxes" are used, it's very hard to take them back.
The Republican opposition to including any tax increases in a long- or short-term deficit reduction package has appeared to harden in recent days. The Biden Group negotiations have stalled, since House Majority Leader Eric Cantor (R-VA) decamped to protest that Democrats were pushing revenue increases in exchange for heavy spending cuts. Given that he was the only representative in the Biden Group from the House Republican Caucus, that was a fatal blow to the Group’s efforts. President Obama met on June 27 with members of the Senate leadership team in an attempt to reinvigorate deficit reduction negotiations. Without some compromise on revenues, the path to an agreement is not clear. Democrats insist on a “balanced approach” with revenues and spending cuts. After meeting with Obama, Senate Minority Leader Mitch McConnell (R-KY) fell into step with Cantor and echoed former President George H.W. Bush: “No new taxes.”
Throughout this long season of deficit negotiation, there has been a subset of Republican congressional voices opposed to any and all tax increases. That House and Senate Republican leaders are now singing this song is not encouraging. In a news conference on June 29, President Obama said that those lawmakers hold an indefensible position and predicted that they would reevaluate it. The president said he would support cutting spending by more than $1 trillion, including cuts in defense, and looking for ways to control entitlement costs. But he said Republicans must agree to allow some taxes to rise for very wealthy Americans, and to eliminate tax breaks for oil companies and corporate jet owners.
Tax provisions that benefit wealthy special interests were thought to be the food of compromise from a political perspective. After all, tax increases, particularly if targeted at the wealthiest Americans, appear to be among the most popular ways to reduce the budget deficit. The most recent Washington Post/ABC News Poll found that 57 percent of Americans believed the best way to reduce the deficit was through both tax hikes and spending cuts.
To remind us all just how much reinforcement can be found in the failure to compromise (at least for another month) a coalition of 40 conservative groups has launched the Cut, Cap, Balance Pledge. At this writing, 12 Senators, 22 House members and 59,000+ citizens have signed the pledge, “to urge Members of Congress to oppose any debt limit increase unless all three of the following conditions have been met: (1) Cut - Substantial cuts in spending that will reduce the deficit next year and thereafter; (2) Cap - Enforceable spending caps that will put federal spending on a path to a balanced budget; and (3) Balance - Congressional passage of a Balanced Budget Amendment to the U.S. Constitution -- but only if it includes both a spending limitation and a super-majority for raising taxes, in addition to balancing revenues and expenses.” Notice this pledge does not assume the need to raise revenues except under extraordinary circumstances, hence the requirement for a 3/5 majority vote.
I know what you’re thinking: given the very different world views and policy preferences of the two parties, is it possible they will play chicken all the way to August 2? Lots of observers say yes — this week’s developments make an earlier agreement much less likely.