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GOP Dilemma: Defense Cuts or Tax Pledge
Defense $$ In Peril, Pressure Builds on Anti-Tax Pledge
Worried by the "sequestration" blade set to fall on defense budgets in January, Republicans are sounding alarms with special hearings, a flurry of press releases and bills that offer at least interim solutions.
But will Republicans also reconsider their "anti-tax hike" pledge to the powerful lobbyist Grover Norquist? A rising chorus of critics, including some prominent Republicans, argue they must, and soon, if Congress is to avoid a devastating hit to military readiness and America's defense industry.
"Grover Norquist is wandering the earth in his white robes saying if you raise taxes one penny he'll defeat you," former Republican Senator Alan Simpson recently told CNN. "He can't murder you. He can't burn your house. The only thing he can do…is defeat you for reelection. And if that means more to you than your country…you shouldn't even be in Congress."
Simpson co-chaired with Erskine Bowles the National Commission on Fiscal Responsibility and Reform which, like every bipartisan examination of the debt crisis, urged a "balanced" solution: a large proportion of savings from slowing growth in popular entitlement programs, like Medicare and Social Security, and a smaller portion from raising tax revenues.
Republicans so far have rejected any tax increases. But their anti-tax pledge to Norquist and his group, Americans for Tax Reform, is on a collision course with another tradition for Republicans, protecting defense budgets.
Major defense contractors Wednesday warned that because of the sequestration threat of deep and arbitrary cuts across all defense programs starting Jan. 2, they have slowed hiring, shelved pending contracts and could begin laying off ten of thousands of employees by October.
Rep. Harold "Buck" McKeon, chairman of the House Armed Services Committee, called the hearing to alert the nation to another threat from sequestration. But Rep. Adam Smith (Wash.), the committee's ranking Democrat, reminded McKeon and colleagues how they got into this fix.
It was House Republicans, he said, who refused last summer to raise the debt ceiling without a deal to cut deficit spending without raising taxes. The result was the Budget Control Act. It directed a trillion dollars in cuts over 10 years including $487 billion from defense. The act, which McKeon voted for and Smith did not, also established a "super committee" of Republicans and Democrats with extraordinary powers to design and hustle through Congress a second round of cuts worth $1.5 trillion over a decade.
The law also specified if no deal was reached then $1.2 trillion in "sequestration," or automatic across-the-board cuts would occur, starting in 2013. The defense budget share is about $500 billion, or $55 billion a year over nine years, on top of the $487 billion in cuts already planned.
The super committee failed. Norman Ornstein of the conservative American Enterprise Institute, co-author of a best-selling book on the current Congress, "It's Even Worse Than It Looks," largely blames Republicans.
Senate Republican Leader Mitch McConnell appointed "ardent anti-tax" colleagues to the committee so the only Republican offer to emerge sought trillions in tax cuts in return for closing $300 billion of unspecified tax loopholes. "A ridiculous deal," Ornstein said.
By contrast, super committee Democrats offered significant cuts in the growth of entitlements in return for tax increases proposed by Simpson-Bowles and by a bipartisan group of senators called the "Gang of Six." With no Republican support, those concessions were withdrawn, Ornstein said.
"Republicans' stubborn resistance to any increase in revenues is the biggest reason why sequestration is even a possibility," Smith said.
One Gang of Six member, Republican Sen. Tom Coburn of Oklahoma, all but declared war on the anti-tax lobbyist Sunday with a commentary in the New York Times titled, "Norquist's Phantom Army." Coburn argued that Norquist and Democrats are exaggerating the lobbyist's influence.
"While most Republicans do, of course, oppose tax increases, they are hardly the mindless robots Democrats say they are," he wrote. Norquist quickly hit back, saying Coburn painted a false picture of weakening support.
Ornstein does see growing unease among Republicans handcuffed to the anti-tax pledge. Sens. Lindsey Graham (R-S.C.) and John McCain (R-Ariz.) have suggested raising taxes to protect defense. McKeon did too, last December, but hasn't since.
Claude Chafin, McKeon's spokesman, said the chairman still believes the "real driver of our debt" is mandatory spending not low taxes. He wants Democrats to make a "counter offer" to his bill, which would delay the effect of sequestration for a year by cutting the size of the federal workforce.
"If you're unwilling to raise revenue, you better be willing to make dramatic cuts in defense," Smith warned in a phone interview, because cutting non-defense programs alone can't deliver enough savings. That's the simple math that has driven every study on the $17 trillion debt toward a balanced solution, he said.
McKeon, who has signed the anti-tax pledge, didn't discuss raising taxes to get a budget deal at the hearing with defense contractors. Rep. Robert E. Andrews (D-N.J.) wasn't as encumbered.
"It's become an article of almost religious faith around here, for some members, that any revenue increase, at anytime, on anyone should be taken off the table. Who here agrees with that proposition," Andrews asked.
David P. Hess, president of Pratt & Whitney, said defense companies are making the tough decisions now on right-sizing their work force and closing facilities. So, he said, "I think everything has got to be on the table at this point." Hess cautioned that this was only his personal opinion.
Robert J. Stevens, chairman and CEO of Lockheed Martin, said his method of addressing budget challenges is "to put into the recipe every possible ingredient" to get "a flexible array of solutions."
Andrews reminded the executives that, to save Social Security in the early 1980s, President Reagan twice signed bills that raised revenue. Republicans "would be wise to follow President Reagan's example in this time of national emergency," he said.
"Oh that we had President Reagan," McKeon quipped.