WASHINGTON — On a Saturday afternoon in October 1990, Sen. Pete Domenici turned from a conversation on the Senate floor, caught the eye of a clerk by raising his right hand, and voted in favor of a huge and contentious bill to reduce federal deficits. Then he put his hand back into his pocket and returned to the conversation.
It was the end of an era, although no one knew it then. It was the last time any congressional Republican has voted for higher income taxes.
The conservative revolt against that 1990 legislation – and against President George Bush, who violated his own “Read my lips” vow not to increase taxes – was a seminal moment for Republicans. The party of balanced budgets became the party that opposed tax increases.
When conservatives sank Speaker John A. Boehner’s plan last week to acquiesce in tax increases for the most affluent Americans as part of a potential broader deal with the Obama administration to avert tax increases for everyone else, several said that 1990 deal was a reason. They regard Bush’s broken promise as a major reason he was not re-elected, and they say the deal proved that such deals do not restrain the growth of government.
But the 1990 legislation also highlights a basic challenge now facing the party, which the chaos within the House caucus helped bring into public view on Thursday night. Republicans continue to embrace the no-new-taxes stand as a centerpiece of the party’s identity, even in the face of public opinion that strongly supports tax increases on high incomes. And some Republicans fear that the party’s commitment to prevent tax increases is coming at the expense of those other, older kinds of fiscal responsibility.
“Republicans used to be interested in not running continual rivers of red ink,” said former Rep. William Frenzel, R-Minn., who as ranking member of the House Budget Committee in 1990 helped to negotiate the deficit deal. “If that meant raising taxes a little bit, we always raised taxes a little bit. But nowadays taxes are like leprosy and they can’t be used for anything, and so Republicans have denied themselves any bargaining power.”
The resulting debate has created perhaps the greatest test of the tax stand in the last two decades. Republicans who are willing to accept tax increases as part of a broader deal are pitted against a conservative wing, restocked by the tea party wave of 2010 that insists that opposition to tax increases is particularly important at times like these, when the temptation is greatest to avoid spending cuts by asking Americans for just a little more.
Many in the anti-tax camp come from deeply conservative districts and were re-elected by wide margins. They were not even swayed by Grover Norquist, the activist and arbiter of anti-tax orthodoxy, who has pushed politicians for the last 25 years to promise that they will not raise taxes, a pledge the vast majority of congressional Republicans have signed. Norquist said that Boehner’s proposal was not a tax increase, but he could not persuade the generation of politicians he helped to create.
“We know that our big problem is too much spending,” Rep. Louie Gohmert, R-Texas, said on Fox News last week, explaining his opposition to Boehner’s plan. “We know that President Reagan fell into the trap and President George H.W. Bush fell in the trap of ‘Here, just raise taxes on somebody and we’ll come along with the cuts later.’ ”
Tracking a development
The Republican Party’s embrace of tax cuts is often traced to the 1970s, when conservative thinkers began to argue that cuts were not just politically advantageous but also fiscally responsible. The economist Arthur Laffer famously advanced the theory that cuts could even be self-financing, because they could generate enough economic activity to increase revenue.
Others said that cutting taxes would force the government to cut spending, too, an idea colorfully described as “starving the beast.”
But the movement did not truly take hold until the early 1990s. Some congressional scholars argue that opposition to tax increases offered a new kind of ideological glue after the Cold War. Others cite changes in the political landscape, including the rise of advocacy groups like Norquist’s Americans for Tax Reform, and the purification of congressional districts through gerrymandering, which led House members to fear primaries more than general elections. And the electoral success of the political strategy – many voters are swayed by promises of a lower tax bill – became its own justification.
In the early 1980s, majorities of congressional Republicans voted for a pair of deficit deals orchestrated by President Ronald Reagan, even though tax increases accounted for more than 80 percent of the projected reductions. But by 1987, a majority of Republicans opposed a third deal, even though only 37 percent of the reductions came from tax increases.
The 1990 battle echoed the present situation. The economy was struggling. Deficits were growing. Congress had enacted automatic spending cuts that it was racing to avoid. Republicans did not want to raise taxes. Democrats did not want to cut spending. Bush, convinced that the government needed to balance its books, reluctantly agreed to break his no-new-taxes pledge. Once again, less than 40 percent of the money came from tax increases. Once again, a majority of Republicans voted no.
By 1993, not a single Republican would vote for a deficit package drafted by the Clinton administration, and congressional Democrats that laid the groundwork for the first balanced budget since the late 1960s.
Instead, in 2001 and 2003, Republicans passed tax cuts that more than reversed the increases during the Clinton administration.
“When I entered politics, the frame of reference was a balanced budget as the principle conservative precept,” said former Rep. James Leach, R-Iowa, who served from 1977 to 2007. “Today, it’s the level of taxes.”
Walking the tightrope
In order to maintain that commitment, Republicans will probably need to develop a similar consensus about how to reduce federal spending. The party’s conservative wing wants to circumscribe benefit programs, particularly the health care programs Medicare and Medicaid, but those programs are hugely popular with voters. The goal of balancing the federal budget has all but vanished from the party’s language, replaced by the idea that deficits should be reduced to sustainable levels.
The 1990 deal still won the support of 47 Republicans in the House and 19 Republicans in the Senate. Only four of those 66 are still in Congress, and Sen. Richard G. Lugar of Indiana and Rep. Jerry Lewis of California both will step down at the end of the current session, leaving just two: Sen. Thad Cochran of Mississippi and Rep. Frank R. Wolf of Virginia.
Domenici, the New Mexico Republican who played a key role in negotiating the 1990 deal, which he regarded as necessary to reduce federal deficits, left the Senate in 2009. But he has continued to advocate a similar approach, as co-chairman of a commission organized by the Bipartisan Policy Center that called for a mix of revenue increases and spending cuts to stabilize the federal debt.
He said he was frustrated by the reflexive opposition of conservatives to any kind of tax increase, but he added that Democrats had also shown little willingness to negotiate necessary cuts in spending on federal entitlement programs.
“There has been a hardening in the Democratic line, too,” he said. “There isn’t any Democrat in here that is going to help with these cuts.”