The White House is fighting hard to resolve the debt-ceiling crisis with a deal that raises taxes to maintain elevated spending levels. Republicans need to understand that compromising on taxes would be disastrous, possibly guaranteeing President Obama’s re-election in 2012.
We found ourselves in a similar situation 21 years ago. Between August and November 1990 Congress agreed to six temporary adjustments of the debt ceiling while pursuing budget negotiations with the White House. President George H.W. Bush had just been elected on his famous promise, “Read my lips, no new taxes.” At the time, however, he was distracted by the brewing war over Iraq’s invasion of Kuwait, and he needed congressional buy-in for Operation Desert Storm. In October, negotiators reached agreement on a budget pact that raised taxes and assured there would be lower spending, ultimately reducing deficits. This agreement was hailed as “the deal of the century.” The $165 billion in new taxes rushed right through Congress, but the agreed-upon spending cuts were quickly ignored. Federal outlays accelerated so far beyond the amount of new revenue that by 1992 the annual budget deficit had more than doubled. Feeding the beast with new taxes had only made matters worse, and by 1993 the government found itself up against the debt ceiling once again. The “deal of the century” was dead.
At the 1992 Republican National Convention, Mr. Bush admitted that the budget deal was a mistake. By then he was facing hard political realities of his own creation. While jogging in St. Petersburg in October 1990, reporters asked Mr. Bush about his broken pledge. He indicated his backside and said, “Read my hips.” To many conservatives, this confirmed their suspicions that Ronald Reagan’s successor had opportunistically taken the banner of fiscal conservatism from the Gipper. When the going got tough he sold out his principles in a back-room deal to make peace with the Democratic big spenders in Congress. This was the spark that gave rise to Pat Buchanan’s 1992 Republican primary challenge to President Bush, and it fueled the third-party insurgency of Ross Perot. This split on the right and among independents allowed Bill Clinton, who in 1991 was a second-tier Democratic candidate without a prayer of winning, to skate into the White House on 43 percent of the vote.
Democrats want to recreate this dynamic so that Mr. Obama could find himself back in the White House, even though his poll numbers have plunged. Tea Party supporters and other conservatives will treat any compromise on taxes as a betrayal akin to the 1990 budget deal. They will either sit out the next election or be so angry they go the third-party route. Such a split is key to Democratic success. Mr. Obama, who made a “no tax” pledge for the middle class is no doubt confident that he can break his promise without penalty. Democrats generally never met a tax they didn’t like, and the White House will simply redefine “middle class” to exclude those on whom they seek to place new and ruinous burdens.
House Speaker John A. Boehner, Ohio Republican, and Senate Minority Leader Mitch McConnell, Kentucky Republican, need to learn the lesson of the 1990 budget deal. Any debt-ceiling agreement that raises taxes while only promising spending cuts will simply give the government more room to binge. Agreeing to new taxes could be the trigger that places Rep. Nancy Pelosi, San Francisco Democrat, back in the speaker’s chair. No wonder the White House is so eager to seal that deal.