Flickr/Gage Skidmore [3].The late Senator Eugene McCarthy once famously said political reporters are like blackbirds on a telephone wire: Whenever one flies off to alight upon another wire, all the others follow. The Washington press corps was in full McCarthy flight the past week after Grover Norquist, founder and leader of the anti-tax group Americans for Tax Reform and custodian of the “Taxpayer Protection Pledge” signed by hundreds of congressional members, appeared for lunch at the Center for the National Interest. The press corps promptly pounced upon Norquist with glee.
The central point hailed by the Washington Post, the New York Times and the Los Angeles Times on the day after Norquist’s luncheon remarks was that this month’s presidential election and today’s politics of fiscal desperation have combined to send a potentially crushing force toward Norquist’s famous Pledge and hence his political standing. The reasoning goes like this: With Congress grappling with the “fiscal cliff” wrought by its earlier abdication of duty in creating the “sequestration” showdown in the closing days of this year, a compromise will be necessary to avert disaster; any compromise inevitably will have to include tax increases as part of the mix; that will mean many signers of Norquist’s Pledge will be forced to repudiate same; and that will cut the legs out from under Norquist and his entire organization.
In full disclosure, it should be noted that Norquist is a member of the Board of Directors of the Center for the National Interest, publisher of The National Interest, and an occasional TNI contributor. But his political predicament, and the media’s response to it, offers an intriguing case study in the dynamics of Washington politics in these times of governmental deadlock. The nature of the coverage following Norquist’s luncheon remarks is particularly noteworthy in this regard.
The L.A. Times piece, by columnist Doyle McManus, for example, carried the headline, “Grover Norquist the has-been” and proclaimed that “even he can’t ignore the signs that his hold is slipping.” The Post’s Dana Milbank, after quoting Norquist’s insistence that congressional Republicans will adhere to their anti-tax heritage even in the face of today’s fiscal crisis, writes with a smirk, “Also, the dog ate Norquist’s homework.” He adds that Norquist’s confidence on the matter suggests he has “been on a long trip in a remote location.” The New York Times piece, a front-page news feature rather than a column, took a more dispassionate approach but suggested that Norquist “finds himself in a tricky spot.”
It’s true: Norquist is in a tricky spot. But only the New York Times bothered to note that, as the paper put it, his “long record of success is a rarity in Washington.” The others didn’t add any such perspective on the man’s remarkable political history. Perhaps that’s because they agree with Arianna Huffington’s characterization of him as “the dark wizard of the Right’s anti-tax cult.”
Further explication can be found in an interview heard recently on American Public Media’s “Marketplace,” in which host Kai Ryssdal sought insights on America’s presumed anti-tax sensibilities from Jill Lepore, the New Yorker writer who also teaches history at Harvard. Listening to them over the airwaves, you could almost see them scratching their collective head in utter bafflement over Americans’ incomprehensible aversion to taxes and their inexplicable inability to understand why they are so important to any functioning society. There must be some explanation for this, Ryssdal pleaded. Well, yes, there is, replied Lepore; it’s because the anti-tax people have been so good at marketing their nefarious point of view in the political arena whereas their opponents—her people and, apparently, Ryssdal’s—simply defaulted on the task of selling the American people on the civic necessity of taxation.
There was no hint of any curiosity over what might be the optimal tax rate in any given polity at any given time; no hint of an understanding of the impact of tax rates on business activity or productivity growth (and certainly no perceived connection between productivity growth and GDP growth); no hint of an awareness that within the taxation debate was a more fundamental debate over the size and scope of the federal government—a debate, incidentally, that has swirled through American political history since the country’s inception.
It’s as if Lepore and Ryssdal wanted listeners to understand the issue as one between those who simply oppose taxation in absolute terms because they don’t understand how society works and those who understand that, as Lepore puts it (quoting Oliver Wendell Holmes Jr.), “Taxes are what we pay for civilized society.” It’s probably believable that such a view of the debate could be sincerely held by someone who divides her time between the New Yorker and Harvard. But considering the interview was conducted by a man who has gained national attention as the host of a heralded radio show on business, Ryssdal’s questioning was remarkably fatuous.
For further insight into all this, one can go to Lepore’s article in the current New Yorker. It purports to be a history of taxation in America, and like nearly all New Yorker pieces, it contains an abundance of serious information. But, also characteristically, the information is presented and ordered in ways to finesse elements of the story and present what is ultimate a distorted picture.
The article contains an underlying theme that ribbons its way through much of the magazine’s journalism—a conviction that, if political events aren’t unfolding according to the rarefied sensibilities of New Yorker writers and editors, the explanation must involve people who habitate the political environment wearing black hats—bad guys who manipulate public opinion in a nation of people who are basically dupes.
In Lepore’s telling, Americans accepted passage of the Sixteenth Amendment in good grace a century ago and supported the subsequently-enacted income tax. But with America’s entry into World War I, the top income-tax rate went up—from 7 percent to 70 percent. Still, few Americans paid any income taxes at the time, and this seems to be what Lepore considers just about ideal—rich people paying 70 percent while most taxpayers are exempt. But this level of taxation couldn’t hold, as Lepore acknowledges. She writes, “Wilson’s tax policies were one reason that his party lost Congress in 1918, and the Presidency in 1920.”
This sentence seems to say that the issue of taxation in itself generated a backlash against an optimal tax regimen. She views the backlash as stirred primarily by rich autocrats protective of their net wealth. She neglects to mention that Wilson’s tax policies contributed to a devastating recession, with no economic growth in 1919, a 2.24 percent decline in 1920, and a further 4.16 percent decline in Wilson’s final budget year of 1921. The question she ignores is what a top income-tax rate of 70 percent does to the economy—and what that does, in turn, to political attitudes toward an incumbent or incumbent party that fosters such an economic cataclysm.
Then came the Republican presidential administrations of the 1920s and that premier black hat of Lepore’s narrative, Treasury Secretary Andrew W. Mellon. He was rich, so he must have been a black-hat type, and on top of that he fostered a severe reduction in marginal tax rates, adding to his bad-guy persona (and to Lepore’s characterization of him as a man simply out to aggrandize his own wealth). But, again, Lepore neglects to mention some pertinent facts. For example, amid Mellon’s early tax-reduction policies (not very dramatic, down to 46 percent in 1922), gross domestic product shot up to $85 billion in 1923 from $69.1 billion in 1921. The turnaround from the Wilson recession was amazing (including a GDP growth rate in 1922 of nearly 14 percent).
Then came the Great Depression and the New Deal—and tax rates more in keeping with Lepore’s philosophy, up to a top rate of 79 percent (and later, during World War II, to 91 percent). Now this gets closer to Lepore’s sweet spot. But it also created another huge backlash, which Lepore characterizes as an assault on American civilization by rich autocrats who somehow managed to hoodwink the American people on the issue. She is particularly disdainful of New Deal and Great Society Democrats who drew a distinction between federal transfer-payment programs (welfare, farm subsidies, Food Stamps and Medicaid) that were paid for with income taxes, on the one hand, and so-called safety net programs such as Social Security, on the other. The latter were funded by payroll taxes that were intended to be tied directly to the benefits received.
That rankles Lepore because, in her view, these programs, too, should have been based on income-tax collection, transfer payments and concepts of redistribution. She writes, “The architects of the War on Poverty, like the New Dealers before them, never defended a broad-based progressive income tax as a public good, in everyone’s interest.”
This is a remarkable statement given that it refers to a time when America’s top income-tax rate hovered between 70 percent and 91 percent. It also ignores the political reality, fully understood by Franklin Roosevelt, that Social Security would never have passed as an income-tax-based transfer program.
Then things really began to fall apart, from Lepore’s perspective, when Ronald Reagan arrived with a political scythe directed at tax rates he believed had thwarted economic growth in America. Of course, Lepore makes no mention of the “stagflation” and economic malaise that contributed to Reagan’s election and his success in reshaping the country’s fiscal policy. Nor does she mention Reagan’s impressive economic record (including restoration of strong GDP growth rates). Such mentions would have implied that there was some logic in Americans’ affirmative response to Reagan’s fiscal advocacy.
Lepore ends her article by listing in dramatic fashion all the things we get from taxes, including “civilized society, modernity, prosperity…roads and schools and bridges and police and teachers…doctors and nursing homes and medicine…rescue workers, shelters, and services” and much more.
Of course we do. But we also get bloated governments with huge unfunded liabilities in government-employee-benefit programs; unchecked bureaucracies; a tax code that favors those who know how to game the system over ordinary citizens; mammoth corporate-welfare programs for huge companies and particularly big banks; and the kind of corruption seen in President Obama’s subsidies to Solyndra and other “clean energy” enterprises (which, among other things, helped former Democratic Vice President Al Gore increase his net worth from $2 million to $100 million since leaving public service).
This issue isn’t, as Lepore would have it, about whether we should have a tax system so we can have a civilized society or whether we should do away with taxation as a menace. It is about what kind of tax system we should have; how much it should extract from the toil of Americans at any given time based on a careful assessment of the needs of society balanced against the impact of taxation on individual enterprise; what kind government we want and how big and intrusive it should be; and whether we wish to become a social-democratic society in the mold of Western Europe or adhere generally to our heritage of rugged individualism and entrepreneurial ferment.
These questions rise up into the country’s consciousness and its direction-setting every day. It’s called politics, and it is firmly and appropriately in the hands of the American people, who set the country’s azimuth on an ongoing basis by responding to the political stimuli brought forth by the political system.
Which brings us back to Grover Norquist. Unlike Jill Lepore, he understands how this system works, and he’s been plying these turbulent waters with remarkable success for a long time. One can only imagine, reading Lepore’s New Yorker article, just how nettlesome and irritating and enraging he is to such people—and why they may be a bit gleeful as they see the forces of fiscal failure bearing down on his famous Pledge.
But this game isn’t over—or, as Norquist puts it, this isn’t his first rodeo. And, however it ends, the profound societal questions raised by tax policy aren’t going to be settled in any definitive way. That’s because they are embedded in the American political system as thoroughly as the separation of powers or the tenure of Supreme Court justices. And Grover Norquist’s political philosophy will continue to be a significant part of the debate, as will the man himself.
Robert W. Merry is editor of The National Interest [4] and the author of books on American history and foreign policy. His most recent book is Where They Stand: The American Presidents in the Eyes of Voters and Historians [5].