printable banner

U.S. Department of State - Great Seal

U.S. Department of State

Diplomacy in Action

The Influence of Tax Reform Policy in the Presidential Election

Grover Norquist, President, Americans for Tax Reform
Tampa, Florida
August 30, 2012

 1:00 P.M. EDT


MR. NORQUIST: Thanks. Hi, glad to be with you. I run Americans for Tax Reform. It was put together in 1985 by President Reagan. He asked me to run it. The goal was to help pass the 1986 Tax Reform Act. So a lot of what we’re talking about today in tax reform in the United States – reducing marginal tax rates, broadening the base – is exactly what we did in ’86. In 1986, the top rate for individuals came down from 50 percent down to 28 percent. The corporate rate went down to 34 percent, from 48 down to 34 percent, and a lot of deductions and credits were eliminated. It was revenue neutral. It was not a tax increase.

One of the reasons it worked was that Reagan said if you guys bring me a tax increase, I’ll veto it. So everybody knew the rules: No tax increase, see how far you can get the rates down. Within those constraints, they did what they did. And there were lots of arguments about which deductions should get eliminated and which ones shouldn’t, and I could care less about that. The goal was to get the rates down, and the various industries and affected concerns could fight about their deductions and credits, and I didn’t care. So rates down, broadened base, just what we did in ’86, we’re talking about doing that again.

Okay. Why hasn’t it happened yet? Well, the United States has changed a great deal from having a two-party system. After the Civil War, where if you lived south of the Mason-Dixon line you were a Democrat and if you lived north of the Mason-Dixon you were a Republican, and being a Republican didn’t tell you anything about whether somebody was for higher taxes or lower taxes or a big army or a small army or any of the kind of issues that we tend to think of as politics today. It just told you you were born north of the Mason-Dixon line.

And then we had waves of immigrants who would come in, and whoever was mean to the immigrant, the immigrants became the other party. That is not a very good way to pick up teams if you’re trying to run a serious country. And so during Reagan’s lifetime, we separated out shirts and skins. If you want lower taxes, less government spending, over here, Republicans; if you want higher taxes with an expansive view of what government can do, like tell people whether they can have big soft drinks or not in New York, you’re over there with the Democrats. Okay.

And largely, the parties have sorted themselves out. For instance, when we did tax reform in 1986, 33 Democrats voted to drop the top rate for individuals to 28 and the top rate for companies to 34. Thirty-three Republicans senators voted for that. When we – when Bush said in 2001 let’s undo some of the recent tax increase of Clinton and take the top rate from 40 to 35, we had not a single Democrat willing to support that tax cut. So the two parties have really separated out. The idea that Democrats are there wanting to have pro-growth reduced rates, which 33 of the – which 33 senators in 1986 was more than half of the Democratic senators – not there anymore. And similarly, if you go to the Republicans and say how about spending money for a stimulus package, as Obama did, he couldn’t get a single member of the House of Representatives to help support the $800 billion spending program because Republicans say we don’t think this will help the economy; this – we think this will hurt. Very much a strong separation between the two parties.

What happens? One scenario: The Republicans have the House of Representatives today. They have a strong majority. That majority should stay and perhaps strengthen because redistricting was largely run by Republican-controlled states. So not only did the newly elected congressmen get shorn-up districts, but you also have more Republican districts available. So it should be a little more Republican, or roughly the same.

In the Senate, there are 23 Democrats up, 10 Republicans up. When you look at who’s up, there are two Republicans you worry about: Scott Brown, who’s running ahead in Massachusetts, and Maine. And in – of the Democrats, there are 10 that could lose. Okay? If they lose net three and the Republicans have the presidency, the Republicans have control. The Republicans need three or four net to own the Senate, to have 50-51 percent of the Senate. They’ll get that. You can look at Montana, North Dakota, Wisconsin, Nebraska now, Florida, Virginia, and Ohio all running neck-and-neck, the Republicans will get more than the net three or four that they need.

That’s a Republican House and Senate. Okay, they can do lots of stuff if you have a Republican president. So that’s one scenario, is Republicans do well and you have a Republican House, Senate, president. What happens? They pass the Ryan budget, which does several things: takes the top marginal tax rate for businesses and individuals to 25 percent, down from 35. It broadens the base to make it revenue neutral. And we go to a territorial system. Right now, as you know, most countries tax people that work in their country but they don’t tax people who are working in a different country. The United States says you may think you’ve moved to France and are working there but we claim to be able to tax you during – while you’re doing that. And the same thing with American companies. Moving to a territorial tax system would make American companies much more competitive and make it easier for Americans to get hired abroad, not make them more expensive than hiring a German or a French person.

And taking the top rate to 35 reduces most of the problem caused by the tax differentials. Twenty-five is not our goal. We want to get it to lower than 25, but 25 is not a bad start. And it takes us back to roughly where we are under Reagan, which was 28 percent on the individual side, but 34 goes down to 25.

So if you have a Republican House, Senate, and president, that’s what happens. In the first – the day after the election, the Republican leaders in the House, Senate, and the president will say we are going to take all of the expiring tax code – the 2001, 2003 tax cuts – and extend them one year. We’re going to take the Alternative Minimum Tax patch, extend that for a year. All of the R&D tax credits, all the credits that end on January 1st of 2013, five months from now, we’re going to extend those for a year, and during that year do tax reform. And therefore, this doesn’t have to happen in the first days or weeks of January. The so-called fiscal cliff January 1st only happens if you don’t have a united Republican government. If you have a united Republican government, they’ll announce, look, don’t change your tax withholding, don’t change your plans; we’re going to – it may take us until February to change the rules, but we’ll do it retroactively; we’re telling you that now so you don’t panic.

If the Democrats have either the presidency or the Senate, that’s when you have a knock down-drag out and either the Democratic Senate or the Democratic president could sit on his hands. And if nothing is done, no vote taken, there’s a $500 billion tax increase that takes place on January 1st of next year. This is why the tax issue, while always important in American politics going back to the Tea Party and the tariff during – pre-Civil War to today will be more important than any election because if you elect Romney, there isn’t a $500 billion tax increase in 56 days. And if you elect Obama, there is. Choose.

And Obama used to promise in 2008 that he would never allow any tax increase on any American who earned less than $250,000 a year. Remember that promise from 2008? Okay. He has a new promise, started August 8th in Grand Junctions, Colorado. He’s repeated it six times since verbatim, so this is not like a one-day slip of the lip.

The new promise runs as follows: My plan, he says, is not to allow any tax on any American who earns less than $250,000 on their income tax in the next year. Two changes in the promise. We’re only covering income tax. It does not stop a value-added tax, does not stop an energy tax, does not stop sales taxes, does not stop excise taxes, only income taxes. And it expires in 12 months. So if you elect Obama, one year later he has promised nobody in the room that he won’t take anything from them. Okay?

So he has just taken that ironclad tax protection promise of everybody except the 2 percent over here – right? – I won’t touch you ever, ever, ever – and shifted it to hi everybody, I won’t raise your income taxes for a year. At the end of a year, I’ll do what I goddamn want. Okay? That is a huge, huge shift. And with a $500 billion tax increase coming in January, everybody is at risk. So I think the tax issue is going to be higher.

The business community is very unhappy about territoriality and very unhappy about a 35 percent corporate rate when the European average is 25, our friends in Canada are about 17 going to 15. Okay? Why you’d compete – how do you compete with that at the corporate level? Corporate America is very unhappy. You talk to the high-tech people who are international; they are very unhappy about a worldwide tax system we have and not territorial. And Obama is wedded to worldwide. It’s not negotiable. That’s what he’s committed to.

So this election is all about whether we do tax reform. And if we do, you saw the outline of it in the Ryan plan, and then of course the spending reforms outlined by entitlement reform and taking spending as a percentage of GDP down. So that’s the Republican plan.

The Democratic plan, if there is one, is the budget of Obama. But on the other hand, when it put it up for a vote in the House and the Senate, not a single Democrat voted for Obama’s budget, so maybe the Democrat position is that that’s not their plan. But what Obama wrote down was a trillion dollar deficit for the next 10 years and no end in sight. That’s his plan, to the extent that there is one, written down. Plus hope and change.

Questions? Thoughts? Arguments? Yes. We’ve got a microphone coming. Just sort of throw it over to him.

QUESTION: These things you talk about, about fear of tax increases, how is Romney campaign attuned to that message and making it a wedge issue for the election?

MR. NORQUIST: You’re seeing it in conversations. You’re going to be seeing more of it in ads that Obama’s looming tax increase is coming, a lot of mail. It’s going to be highly visible. Watch for it in the debates as well.

Obama is trying to counter that he can imagine that if you did tax reform like Ryan said, maybe it eliminates certain taxes and deductions which would hit certain people hard. That’s their imagination. That’s not Ryan’s plan. So they’ve made up a make-believe Ryan tax cut which they say, well, if you did this, that would be bad. Okay, but that’s their construct, not Ryan’s plan. But he has to do that.

Remember he, Obama, ran against McCain as a tax increaser because McCain had once endorsed the idea of reducing the tax deductibility of high-end insurance – health insurance costs. And he attacked McCain for having that be a tax increase, and it’s part of Obamacare. You’re allowed to lie in political ads, just not if you’re advertising bread or stocks.


QUESTION: Hi, I’m Christina Lamb from the Sunday Times of London. All the polls show that people think Romney would be better at managing the economy, and yet Romney and Obama are pretty much neck and neck in the overall polls. What do you think Romney has to do to convince people that he should be the next President of the United States?

MR. NORQUIST: Yeah. Right now you’re right; they’re neck and neck, 45/45, 47/47. As you know, Reagan was down eight points at this point when he was running against Carter. One of the things they teach you in political school is the incumbent gets his popularity rating. The incumbent – people who have known you for four years, and everybody knows the President of the United States, even occasional voters know who the President is and have some sense as to how he’s doing – you tend to get your approval rating/number of people who’ve said they were for you, and you get little, few, or no of the undecided. So I’m very happy where Romney is right now with the President stuck at 45, 47 percent of the vote.

If you talk to Ralph Reed, who runs Faith and Freedom, they just mailed 1.9 million Evangelicals who aren’t registered to vote in key swing states and the 4 million Evangelicals who voted in 2004, forgot to vote in 2008. Getting those people back to the polls and changing – everyone keeps talking about the demographics, but demographics change overnight for people who forgot to vote to people who will vote. Demographics is not just something that shows up 18 years after somebody gets born. The same person can be a nonvoter and then become a voter again.

So I’m very happy with how we’re doing and how the Romney campaign is structured and that we have an ability to turn out our voters who haven’t been voting. And they turned out everybody – including some people who don’t exist in the real world – four years ago for their last election.

I think what you’re seeing in this convention is humanizing him for undecided voters who don’t follow capital gains tax cuts or monetary policy but want some sense as to whether they like you. His wife speaking was very powerful to a lot of married women and single women going: If she has that to say about him, that’s helpful. And then you saw the same, I think, very powerful talk from the vice presidential candidate Paul Ryan.

And anecdotally I’ve heard people who don’t follow politics very much very impressed with his manner as well as delivery. Of course, I do politics all day; all I could hear is his wonderful policy programs. But other people listening – you meet with someone and the only thing your wife knows is what jewelry they were wearing and didn’t hear what they said. Okay, some people view politics that way. And their take from listening to a politician is different than what mine would be. I think they’re appealing a lot to those voters fairly well in this campaign.

And then the other one is just to make sure for people who want clarification, what’s the Ryan plan mean and what doesn’t it mean. Nobody who is over 55 will see their Medicare change at all. That makes it difficult for the Democrats to lie about the Medicare plan, because our plan – unlike hope and change – is written down.

Yes, ma’am. I’m calling on people so I’ll --


MR. NORQUIST: Show hands so I know who’s looking in the future. One, two. Okay.

QUESTION: I’m curious about what you expect about Romney speech tonight. Will it be also personal? Will it launch new ideas about what he wants to do as a president? What do you expect?

MR. NORQUIST: I think it’ll be one of clarifying and making clear, as Ryan did well, what his economic policies are on taxes and spending, and giving a sense of who he is as a man. Guys in the press who follow these candidates all the time get bored because they say the same thing all the time, but for a lot of Americans, this is going to be the first time they’ve heard Romney talk about either himself or his policies.

So those of us who are waiting, “Could we hear something new please? Because I’ve heard it all before.” Well, yeah, but you were watching C-Span and you were watching Cable News Network. Nonaligned voters, independent voters, guys who haven’t decided yet, people who walk up in the morning and can’t tell the difference between the Republicans and the Democrats. They haven’t heard it all before. They haven’t heard it once. So you and I might go, “Well, I’ve heard him speak before and I’ve heard that before.” We’re not the audience. The audience is the people for whom this is really the first time they’ve heard him.

And if you try and do something new and different, you mess it up, because you think they’ve heard all of the preconditions of your speech. You really are starting from ground zero. You better tell people, “I was the governor of Massachusetts,” and things like that, because you are talking to millions of people who follow politics the way I follow professional sports, which means I vaguely know what’s going on, but I couldn’t tell you much about it.

Sir, and then – oh, I’m – okay, we’ll go you and then you. Okay. Give him that mike and we’ll – sorry, yes.

QUESTION: Sir, thank you for doing this. My question is: I mean, you’re advocating the necessity for the government to reduce spending. I would like to hear from you as far as the defense budget is concerned. Are you as well calling for the reduction in defense budget?

MR. NORQUIST: I’ve actually, yes.

QUESTION: And one more thing: I would like to hear from you concerning the U.S. foreign aid. Would you like it as well to be reduced?

MR. NORQUIST: Okay. First, defense budget, second, foreign aid. I believe that conservatives – and I’m a conservative Republican – should look at the defense budget with the same clarity and scrutiny that we look at the welfare budget or anything else. Naming something defense doesn’t mean it’s not wasteful. We know this when the other team says, oh, we’ve got an education budget, and then it turns out that half of the guys are administers, not teachers, okay. Or here’s our transportation budget that doesn’t build transportation, or doesn’t build transportation to anywhere anyone’s going. So just because it’s called defense doesn’t mean it defends the country.

Procurement needs to be reformed, the retirement system in the military needs to be reformed. When the government runs the healthcare system for veterans, you really think they don’t waste any money? You don’t think it could be done better and provide better services than it does right now? I mean, we treat our soldiers – their pension and their healthcare is run by the Post Office. You really think that’s as good as we can do? I don’t.

And I think that we need to be very serious about reining in defense spending and not give it a blank check. There’s no percentage of the economy that’s owned by the defense budget. We used to have 10 percent in the ’50s and in the ’60s. Went down and Reagan took it up to 6 percent to win the Cold War, then it came down to 3, jumped up again 4, 4.5. There’s no set number that it needs to be at. We need a strong enough defense to keep the Canadians on their side of the border and make sure nobody whacks us, but you can still waste money if it’s called defense.

On foreign aid, look, we ought to help people do better, but that means we need to understand why we did well. We did well as a country and had economic growth because we had property rights and low taxes. And we go to other countries and tell the people in Zimbabwe we have elections and we’re rich; if you had elections, you’d be rich. Really? Having elections doesn’t make you rich. Having elections is a nicer way to choose who gets to be king than lopping everybody else’s head off. It’s not a bad way to transition from one government to another, but it doesn’t give you economic growth and it doesn’t give you wealth.

And we’re going to quit talking about democracy as what we have that you don’t have, okay? What we have that you don’t have in a lot of countries that are not functional are property rights recognized by an independent court system and low taxes and regulation which lead to less corruption. The reason you have corruption is you have lots of little taxes and lots of little regulations. Every regulation is an opportunity for corruption. Every tax is an opportunity for corruption. Keep those down rather than telling people please don’t be corrupt; here are your 25 opportunities for corruption and let me hector you to not be corruption, okay? That doesn’t work. Get rid of the tax structures and the regulatory structures that make every bureaucratic cop put his hand out.

And I think we’ve seen tremendous progress with Hernando de Soto’s efforts in Peru. He’s trying to do this now. I talked to him the other day. Both the military in Egypt and the Muslim Brotherhood have asked him to come in and help them assign property rights to everybody who’s living in Cairo and environs. About 25 percent of the houses in Egypt are unconstitutional because it’s against the constitution to build a house on some land that somebody said was agricultural back when Nasser took the place over. So not only is your house not titled; it’s unconstitutional. Well, gee, why can’t you get a loan against the value of your house? Well, it’s unconstitutional. You can’t even leave the place because if somebody else walks in, you don’t own it. So property rights are very important.

I’d rather cancel the foreign aid, which I’m not sure is terribly helpful. The countries we most helped were Taiwan and South Korea where the American left were mad at them and they cut them off and didn’t let them have any foreign aid, and that’s when they started doing well. I’m much more interested in sharing the things we do that are right rather than things we do that are not central to economic development. I mean, I’m for democracy as a way to choose who gets to be president. But choosing the president to elections does not mean you get economic growth.


QUESTION: Yes, hi. I have two questions. Number one is if you could tell us a little bit how did you convince all the GOP lawmakers to sign the pledge?


QUESTION: And the second one is: As a foreigner, for me, it’s really hard to understand this stubbornness to raise taxes when you’re facing this huge, huge deficit. I guess if – in most countries, it would be sort of like a no-brainer to do both a spending cut and a tax increase to close the deficit. But here in the United States, seems like raising taxes is almost like a bad word, like a taboo thing, that you really, really hate taxes. So I’m hoping that you can explain a little bit this hate to taxes.

MR. NORQUIST: Well, let’s see. Taxation is taking money from people who earned it and giving it to people who didn’t necessarily earn it. This annoys people in a free society and they won’t put up with it if they’re allowed to complain.

When we were formed as a country in 1714 and again in 1740, the Americans – the British – Americans living under British control paid 1 to 2 percent of their income in total taxation. The Brits, in order to fund their empire, because they were busy occupying everybody, paid 20 percent of their income for the privilege of being part of an empire and having cool ships and stuff like this, and having wars with everybody. And we decided to pass on that, and as a low-tax country, grew faster than everybody else. And what we ought to do is – and what Americans want to do – is stick with a smaller government that costs less.

When you poll Americans, 2-to-1, they want a smaller government that does less, provides fewer services, rather than a larger government that costs more and provides more services. My favorite recent poll: Which government do you want, the one that’s described as one that will leave you alone or one that will give you a helping hand? One that will leave you alone, 53, helping hand, 34. Americans want the government to protect their rights and leave them alone. Thirty-four percent less say, “Well, the government should go steal things from other people and maybe give them to me.” But that’s a minority position.

And I bet if you asked those 34, when you say lend a helping hand, what do you mean – because when you ask people should the government do more or less to fix the recession, less is a bigger number, but more, half of the people when asked what should the government do more of, they say cut taxes. So they’re actually on my time even though the way they answered the question sounded like they want the government to do something, like spend money. They want the government to do something; get out of the way, tax less.

So anyway, that’s what free people do. They want the government to leave them alone and not steal their neighbors’ money and push them around, and that’s why they don’t want to. It answers the other question we have, is: Why did people – so many people sign the taxpayer protection pledge? Our website –, Americans for Tax Reform, you can go there and see the list of 238 congressman – that’s the majority; only 218 is a majority, 238 is more than a majority – have signed a statement, a pledge to their voters, to the people of the state and the nation, that they’ll oppose all tax increases. They didn’t promise me anything. They promised the voters of their state and the American people they would oppose all tax increases – 41 senators, Governor Romney, Congressman Ron – Paul Ryan have made this commitment in writing. And the reason they did it in writing, because they don’t want to raise taxes, because they were elected by people who didn’t want taxes raised. And the Democrats whine, because they want to spend more money. And they can’t spend more money unless somebody goes out and loots the peasants. So they want the Republicans to do that, and the answer is no.


QUESTION: I would contradict you with the analysis of the American polls. I would say Americans want a lot of government service – of a list of government services, they will say, we want them, but they don’t want to pay for them. There’s some contradiction, I think, in this attitude. And my question would be: What do you say to people that your tax pledge has contributed to the paralysis and the confrontational atmosphere in American politics? It binds people to a certain way to do politics, which limits the way to compromise in the future.

MR. NORQUIST: Two things. One, compromise is what you’re doing if you both want to go in the same direction. Richard Nixon and Ted Kennedy could compromise. Richard Nixon was a Republican – big government Republican. He wanted the government to grow. And Teddy Kennedy was a liberal Democrat. He wanted the government to grow a lot. And so the two of them would compromise every week, every month, every year. Should the government grow some or a lot? Oh, how about grow a lot some, somewhere in between some and a lot. Well, because they were all going in the same direction, towards bigger government, it was very easy to compromise, because you come back next year and keep moving in the same direction. Here’s what changed: Democrats still are committed to bigger government; the Republicans want a smaller government. So do the American people, which is why the Republicans keep winning elections.

And only when Obama ran as somebody who promised he would never spend an additional dollar in government spending unless he cut a dollar somewhere else, in his debate with McCain, a zero growth of government commitment. Complete fabrication, he was fibbing, but he did say it. And he claimed it in his ads, and he said he’d never raise your taxes, especially if you were middle income. That last 16 days before he screwed everyone who smoked cigarettes in the country, 20 percent of the country, average income of $40,000 a year. Sixteen days to go from I promise not to hit anyone who makes more than 250 to getting people who make $40,000 a year.

So you can’t – remember when the Greeks had that really clever thing with the Trojan horse, and they captured Troy because of it? I always wondered why they didn’t capture the rest of Asia Minor with the same trick. Well, because everybody heard about Troy. Okay? You can only lie your way past the American people one time. You don’t get to do it twice. You can’t go and tell them we’re not going to raise your taxes. You said that last time. I’m not going to spend too much money. You said that last time.

And his solutions are all the same ones. He hasn’t come and said I made any mistakes. The trillion dollars in stimulus, that was a good idea; Solyndra, that was a good idea; everything he did was a good idea, except none of it worked. Remember his recovery started in July of 2009. We are past our third year of recovery in this country, third year of recovery. When we were in our third year of recovery from – at the end of the third year of recovery of the recovery that Reagan responded to by cutting marginal tax rates, spending less money, and reducing regulations, Reagan – we had 4 million net new jobs since the bottom of the recession, still below where we were when we went in, but since the bottom of the recession, up four. Reagan was up over 14 million. Ten million Americans would be employed today that are unemployed if we had Reagan levels of recovery with Reagan policies. Instead, we have Obama policies and Obama levels of recovery – 10 million unemployed Americans. And GDP would be 10 percent higher – 12 percent higher, actually. So there’s a very big difference between the two.

But you’re right. If you ask what you said, the American people will tell you they want something if it’s free. “Should we go to Mars?” “Yeah.” “Should we do this?” “Yes.” But every once in a while, some clever pollster will say, “Would you like to go to Mars if it costs you $12 more on your income tax?” “No.” And it’s amazing how low the number has to be before people say no to really cool stuff.

Yes. Yeah.

QUESTION: You were talking a bit there about Obama in 2008 and his comments then. How would you expect Obama and the Democrats next week to handle what Romney and Ryan have been laying out this week and you’ve been talking about this week? What do you think will be their line of argument and defense?

MR. NORQUIST: Sure. Same line that the Democrats have used every year for 40 years: The Republicans want to cut taxes on rich people, and they want to cut benefits to you personally, and vote for us. And that’s what they always say.

Here’s their problem. The Ryan plan is written down. It’s tougher to lie about Ryan’s Medicare plan than it is to make up a lie if you’re focused on nothing. When our friend Bush ran in 2000, 2004, he was for personalizing or privatizing Social Security. And a lot of people said, oh no, you know what, that’s going to be death. Here’s what happened. When he said, “Here’s my written plan, here’s the outline, here’s what we’re going to do. Doesn’t affect you if you’re over 55. If you’re under 55, we’re going to let you take your FICA taxes, Social Security taxes, put them in a 401(k). That’s the plan,” you couldn’t scare people over 55. So the whole Democratic plan on Social Security didn’t work. You can’t scare them as effectively if you’re facing reality written down. And the young people said, “I like that plan.”

So I think the problem for the Democrats is because the Republicans have written down in writing their plans for the economy, it’s difficult to lie about them because they are written down. And this time around, the Republicans will have much money as the Democrats. Obama spent $300 million more than McCain and so when he said something, whether it was true or not, he could say it louder than McCain. This time the megaphones will be more equal and – I mean, there’s going to be a lot of union money we don’t see, but the money you can see will be equal, and that’s a big difference.

Last question.

QUESTION: Hi. Nick O’Malley from the Sydney Morning Herald. Romney and Ryan often discuss closing tax loopholes. But you seem to resist that in your interpretation of the pledge that people signed.

MR. NORQUIST: No. It’s okay to reduce deductions or credits as long as rates come down so it’s revenue-neutral. Always listen carefully. Some people talk about tax reform, limiting deductions on credits and reducing rates, 1986. Some people talk about reducing taxes and credits as a way to raise money.

The Simpson-Bowles commission that Obama had called for two things: adding a trillion dollars in higher taxes through eliminating deductions and credits – a trillion in higher taxes – also, 5 trillion in higher taxes in going from 18.5 percent GDP as consumed by federal taxes to 21 percent. That’s a $5 trillion tax increase. They eliminate deductions and credits not to reform the code, but to get more money is a trillion. You’re looking at somewhere between $5 and $6 trillion in tax increases. That’s what Obama’s guys have been talking about. That’s what Simpson-Bowles is, plus some conversation that some day in the future they might one day think about cutting spending maybe. But that part’s in haiku. The part that’s written down, and there are numbers attached to it, are the tax increases.

So yes, I’m for reducing deductions and credits, just not as a Trojan horse to raise taxes.

QUESTION: Does that broaden the base?


QUESTION: Does that effectively broaden the base?

MR. NORQUIST: Yes, that would broaden the base, and then you’d bring down the rates, make it revenue-neutral. Yeah, that’s what we did in ’86. That’s what we’re looking to do again.

Thanks very much, guys.

# # #